The Budget and Housing

The mission to make Britain a country that works for everyone means more than fighting these injustices”. It’s almost eighteen months since Theresa May stood on the steps of No.10 Downing Street and uttered these words as the country’s newly appointed prime minister, putting a progressive domestic agenda squarely at the heart of her new Government’s political philosophy.

A lot can change in eighteen months, certainly in politics. Today, Theresa May finds herself in the midst of a bitter battle, not only for her own political life, but also for the future of the Conservative Government she leads, with its majority decimated by a disastrous general election campaign and its confidence shaken by a resurgent Labour Party.

This fight continues to play out within the soap opera that is Brexit. May, her hand significantly weakened in negotiations with the EU as a consequence of her lost majority, has had little time to focus on much else other than securing a sellable deal to the British people with Brussels.

The Autumn Budget in November therefore represented a rare chance for May and her Chancellor, Philip Hammond, to reset the narrative and attempt to wrest back some of the political initiative from Labour. Even more pointedly, it was an opportunity for May to once again remind people of her deeply held desire to improve the lives of people here in the UK, regardless of the final outcomes of Brexit.

In the weeks before the Budget, the Government’s focus for the set piece statement became clear - housing. The Sunday papers contained much speculation that the Government would reform stamp duty to help first time buyers get onto the property ladder. Sure enough, the rabbit out of the hat – or central announcement - from the chancellor on Budget Day was that stamp duty was to be entirely scrapped for homes worth under £300,000 and significantly reduced thereafter.

The reform of stamp duty was accompanied by a slew of other announcements that included £15.3 billion in new financial support to build 300,000 homes per year, new planning reforms to speed up construction and a new review to examine why there is such a significant gap between housing completions and planning permissions granted.

If the Government’s reforms pay off – and it’s a big ‘if’ – May’s Government will oversee the biggest level of housebuilding for decades. However, without a significant increase in Government built social housing this will remain a pipe dream. Moreover, increased supply is not the magic bullet that people think it is. Although the stamp duty cut will help, the level of deposits required are still too high, creating a significant hurdle to buying a home.

Nonetheless, if the Government can get it right, an increased level of demand could be good news for brokers. First time buyers who may have been a year or two years away from buying a home, suddenly are faced with much lower costs, making home ownership a more immediately attainable goal. Bridging firms should be prepared therefore for an uptick in applications, as first-time buyers seek to take advantage of a small window of favourable conditions.

May’s once ambitious domestic agenda has been whittled down to a rump. However, as she peeled away policy after policy from her list of priorities as Brexit took hold, it is telling that housing is the one area that has stubbornly remained a key focus. May has called fixing the market her ‘mission’, but the challenge is a titanic one and only Brexit arguably compares.

Nonetheless, this Government has set down a marker and challenged its critics to use housing as a metric by which to measure its legacy, in a way few administrations have dared to do in recent years. Given that she has already been forced to relinquish much of her agenda, we can at least be confident that May will give it her best shot.

By Matthew Young, Lansons