Impact of Autumn budget on construction industry
The Autumn Budget announced by the Chancellor Philip Hammond has included a number of measures aimed at the construction and housing industry, in particular, changes to the Help to Buy scheme that could affect house prices and the new build sector.
The Chancellor announced that a new Help to Buy equity loan scheme will run until March 2023, extending the current scheme by two years. This new scheme will be open to new buyers only and will be available on homes that are under a new regional price cap to be set at 1.5 times the current forecasted average for each part of the country. Stamp Duty will also be removed for first-time buyers of shared ownership homes worth up to £500,000 and can be backdated to last year.
Private Finance Initiatives (PFIs) will be phased out, but existing contracts will be honoured. These infrastructure deals financed public buildings and have long been considered controversial as they can be costly to the taxpayer. These will be removed in favour of Public-Private Partnerships (PPPs) where they can be shown to be profitable. The Chancellor has also introduced a new tax relief for new non-residential buildings which is funded in part by the writing down of long life assets by 2% to 6%. £1bn in British bank guarantees will be offered to small and mediums sized construction firms to boost building.
On the construction employment side, the Chancellor has offered small firms a reduction in apprenticeship levies of 50%, taking it from 10% to just 5%, allowing firms to take on more apprentices. A further £675m is also being provided to improve High Streets, which could lead to more urban housing and possibly the conversion of empty shop space into residential dwellings - all good news for builders.
The Housing Infrastructure Fund is to see an extra £500m, more than half of which is to go to London. 650,000 new homes could be built using this money. This will be further improved by changes to the planning process as suggested by the Letwin report, although the Chancellor has made no promise to make any changes, but to review them.
The Federation of Master Builders has said that the Chancellor has taken positive steps and that empty space in the nation’s High Streets could lead to the creation of up to 400,000 new homes. The FMB urge councils to work with builders to make this happen.