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| Osborne's budget for housing leaves councils in the cold | Osborne's budget for housing leaves councils in the cold |
| (6 months later) | |
| If local government asked for one thing from this week's budget, it was a removal of the cap on borrowing against its housing portfolio. Lifting this cap, bringing the UK in line with most other western democracies, would generate an estimated additional £20bn to invest in housing over five years. | If local government asked for one thing from this week's budget, it was a removal of the cap on borrowing against its housing portfolio. Lifting this cap, bringing the UK in line with most other western democracies, would generate an estimated additional £20bn to invest in housing over five years. |
| Campaigners on all sides, from the Conservative leader of Westminster council to housing statistics analyst Steve Wilcox, agreed that this one measure was needed to give local government the freedom to help drive growth. | Campaigners on all sides, from the Conservative leader of Westminster council to housing statistics analyst Steve Wilcox, agreed that this one measure was needed to give local government the freedom to help drive growth. |
| On Wednesday, they were disappointed. In rejecting the proposal, chancellor George Osborne hit out at those who he said thought the way to cut the deficit was to borrow more; little matter that the rest of Europe allows public property portfolios to be used in this way. | On Wednesday, they were disappointed. In rejecting the proposal, chancellor George Osborne hit out at those who he said thought the way to cut the deficit was to borrow more; little matter that the rest of Europe allows public property portfolios to be used in this way. |
| Responding to the budget, Mike Jones, chair of the Local Government Association's environment and housing board, said the appetite of local authorities to build homes was being "stifled because of a Treasury-imposed housing borrowing cap, which councils, developers and even the markets agree is unnecessary". | Responding to the budget, Mike Jones, chair of the Local Government Association's environment and housing board, said the appetite of local authorities to build homes was being "stifled because of a Treasury-imposed housing borrowing cap, which councils, developers and even the markets agree is unnecessary". |
| This was not the only setback for council housing. Osborne used the budget to introduce new incentives for council tenants to buy their homes under the right to buy, reducing the qualifying period from five years to just three, and increasing the maximum discount on a property to £100,000 in London. | This was not the only setback for council housing. Osborne used the budget to introduce new incentives for council tenants to buy their homes under the right to buy, reducing the qualifying period from five years to just three, and increasing the maximum discount on a property to £100,000 in London. |
| Local authorities are left wondering what their future role in housing will be. Meanwhile proposals outlined in the budget to introduce a "help to buy" scheme, offering a 20% government-backed loan on the value of a property to buyers seeking a home worth less than £600,000, and a mortgage guarantee scheme to help those who cannot save a deposit, come as a boost to housing associations. | Local authorities are left wondering what their future role in housing will be. Meanwhile proposals outlined in the budget to introduce a "help to buy" scheme, offering a 20% government-backed loan on the value of a property to buyers seeking a home worth less than £600,000, and a mortgage guarantee scheme to help those who cannot save a deposit, come as a boost to housing associations. |
| This means, despite initial reaction from the sector, it is actually a budget for social housing as much as for stimulating the private sector; the two are inextricably linked. As James Pargeter, head of residential projects at Deloitte Real Estate, says: | This means, despite initial reaction from the sector, it is actually a budget for social housing as much as for stimulating the private sector; the two are inextricably linked. As James Pargeter, head of residential projects at Deloitte Real Estate, says: |
I'm not surprised that they're focusing their efforts on private sale. I'm quite sure that what they're trying to do will stimulate sufficient demand that it will then act to stimulate the supply ... I think this could be something that will significantly unlock schemes that are not viable today. What comes with that is the section 106 housing that is also not built yet. We need the private housing to be built in order for social housing to be built as well. | I'm not surprised that they're focusing their efforts on private sale. I'm quite sure that what they're trying to do will stimulate sufficient demand that it will then act to stimulate the supply ... I think this could be something that will significantly unlock schemes that are not viable today. What comes with that is the section 106 housing that is also not built yet. We need the private housing to be built in order for social housing to be built as well. |
| While housing associations will benefit from the new social housing stock this investment will create, other providers are also being encouraged into the sector. The budget proposed a consultation looking at real estate investment trusts (Reits) as institutional investors in housing – good news for the first social housing Reit, Houses4Homes. | While housing associations will benefit from the new social housing stock this investment will create, other providers are also being encouraged into the sector. The budget proposed a consultation looking at real estate investment trusts (Reits) as institutional investors in housing – good news for the first social housing Reit, Houses4Homes. |
| The budget was met with some concern by those who felt investment to prop up an ailing market would simply create another property bubble, destined to burst again. The lack of confirmation that purchasers of second homes would be exempt from "help to buy" is fuelling these worries. | The budget was met with some concern by those who felt investment to prop up an ailing market would simply create another property bubble, destined to burst again. The lack of confirmation that purchasers of second homes would be exempt from "help to buy" is fuelling these worries. |
| Ian Mulheirn, director of the Social Market Foundation, says the scheme designed to help younger people move on to the property ladder will really only help older homeowners, with the taxes paid by the young. | Ian Mulheirn, director of the Social Market Foundation, says the scheme designed to help younger people move on to the property ladder will really only help older homeowners, with the taxes paid by the young. |
| One way to avoid this issue is to invest in housing funded and retained by the state, through local authorities. This coalition government has instead turned its back on council housing. | One way to avoid this issue is to invest in housing funded and retained by the state, through local authorities. This coalition government has instead turned its back on council housing. |
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