Budget 2018: industry reactions

After Chancellor Phillip Hammond made several announcements of increased investment in housing and construction in his Budget speech, industry leaders have been quick to comment.

With more positive spending news than many had expected, the commentary was largely favourable, though criticisms remain.

Commenting on the Future High Streets fund, Brian Berry, chief executive of the Federation of Master Builders, said: “It is important that the Chancellor has recognised the importance of investing in our high streets. He has announced a £675 million Future High Streets Fund to allow councils to rejuvenate town centres. It is estimated that as many as 300,000 to 400,000 new homes alone could be created by making use of empty spaces above shops on our high streets. This is space just waiting to be turned into residential accommodation. There is a pressing need to re-invent many of our town centres in light of changing patterns of retail and leisure. The Government should be applauded for its ambition to safeguard the life of our high streets.”

“We would urge councils to take this opportunity to look again at how they can work with local builders and developers to make better use of existing town centre building, and facilitate the development of wasted space above shops. A recent report titled Homes on our High Streets from the FMB puts councils at the heart of the solution and suggests some practical ways for them to facilitate the development of wasted space above shops. Retail will always be an important element of vibrant high streets, but there is plenty we can do on a small scale to help convert unused and under-used space in to attractive residential units. This will both boost the supply of new homes and help breathe new life back into our high streets. What we must avoid is perfectly good space lying empty and achieving nothing in terms of boosting the local economy or housing individuals.”

Carl Dyer, head of planning at Irwin Mitchell, was also glad to see the proposals to build above shops, but noted its shortfalls: “At last: a sensible planning proposal, albeit a modest one. With the retail sector under pressure with the rise of on-line retailing, it makes sense to look at other uses for the many empty shops around the country. As we have a national housing crisis, converting redundant shops to homes is a “win-win” proposition: assets which are no longer used can be converted to address a separate problem without putting pressure on Green Field land.

“All that said, this alone is not going to make a major difference to the housing supply figures. 2017 was a bad year for retailing, with nearly 6,000 shops closing. Not every vacant shop will be suitable or viable for housing use. Even if as many as half of the 2017 losses were to be converted, that would only be an extra 1 per cent towards the government’s 300,000 a year housing target.”

Hew Edgar, RICS head of policy welcomed the “emphasis on the UK high street, but raised concerns over the lack of Brexit mentions and reforms to the Permitted Development Rights (PDR) regime: “It covered many bases, but this budget did not quite live up to the Chancellor’s claim that it would prepare the UK “for every eventuality”. The Chancellor opted to look inward and tackle domestic issues, but there was very little mention of Brexit.

“Having undertaken research, RICS has concerns over further reforms to the Permitted Development Rights (PDR) regime, which has already seen significant extensions. Reforming the planning system has been attractive to policymakers, however, caution must be taken to ensure quality of homes is not sacrificed for quantity and pace of delivery.  In short, PDR extensions could ease the UK housing crisis, but bypassing regulations should be carefully considered if we want to keep the quality of new build homes to an acceptable standard. There is no reason why we can’t have both quality and quantity when it comes to new homes.”

Justin Gaze, head of residential development land at Knight Frank said that the “much needed clarity” on Help to Buy is a positive development: “No industry should be reliant on government assistance indefinitely, so the decision by ministers to restrict the scheme to first time buyers with regional purchase price caps is a sensible one. Some 81 per cent of equity loans since 2013 have been taken out by first-time buyers.”

“However, the ‘deposit gap’ that the Help to Buy equity loan scheme was established to overcome is still very much a problem. U.K. house prices are 37 per cent higher than when the scheme was introduced in 2013 and the mortgage market for those with only a 5 per cent deposit remains very thin. For prospective buyers, finding the funds for a deposit will remain the biggest barrier to home ownership.”

Melanie Leech, chief executive of the British Property Federation, welcomed the Letwin recommendations noted in the budget and in particular, “his focus on the need for a more diverse, multi-tenure approach to large sites.”

She said: “The benefits will be three-fold, both helping to address market absorption rates and deliver homes quicker and help to create more sustainable places home to different demographics, socio-economic backgrounds, fostering a greater sense of community. In addition, adding a tenure such as build to rent to a development site brings with it an investor with a long term interest.

“The Review also recognised the skills crisis in which we find ourselves. Time is of the essence, and whilst we applaud the Government’s intention to take a few months to consider the response to the wider Review, this is an area in which we need urgent action to sure that we can hit the 300,000 target.”