BUDGET GETS LUKEWARM RESPONSE FROM INDUSTRY - <<Back

It was never going to be full of gifts and good news but many in the property industry had hoped that ‘something could be done’ in George Osborne’s budget, delivered last Wednesday.Indeed, ‘something’ was done. A new £250million scheme called First Buy, was announced to ‘kickstart the property market’, but the only part of the property market that will benefit is going to be construction, as the assistance provided by the scheme is only available to purchasers of new homes.

A First Time Buyer, buying a new home, does not kickstart the broader market because their purchase doesn't facilitate another move; it is a dead end.

Dr Neil Bentley (right), CBI Deputy Director-General, said, “In the short-term, the Firstbuy Direct initiative will inject much needed confidence into the housing market and create new house-building jobs. However, funding for the scheme only runs until the end of next year and in the longer-term we need an approach which meets our growing housing needs."The numbers of buyers that the scheme will help is, inevitably, very limited. Samantha Baden, Property Analyst at The Digital Property Group says, “The average price for a first time buyer home is £153,601, our figures show, so the Government’s £250m shot in the arm for Britain’s growing army of thwarted wannabe home owners will help an extra 16,275 of them onto the first rung of the property ladder."This will improve the economic feel good factor but it’s still not enough and is just a mildly larger version of the Labour government’s HomeBuy Direct scheme, which helped an extra 10,000 into home ownership. But high prices and a difficult mortgage market mean there are at least 50,000 first time buyers being locked out of the housing market each year – so George Osborne’s new scheme needs to be much more ambitious if it’s going to ease the first time buyer crisis.”And those seeking real improvements to the planning system were also disappointed. Jonathan Manns, senior planning surveyor, Knight Frank commented, "'Planning,' wrote Patrick Abercrombie, a founder-figure of modern town planning, 'is a conscious exercise of powers of combination and design, and not a question of unconcerned growth, even though the latter may produce fortuitously happy results'. This is a point which the Chancellor clearly failed to appreciate when preparing today’s Budget. After a period of mounting Government criticism, whereby planners are ‘enemies of enterprise’ in a system which acts as ‘a drag anchor to growth’, the Budget comes as a further blow to the property industry. Less than a week after the House of Commons Select Committee criticised the Government for quick and poorly judged reforms today’s announcement will ensure these are compounded."The British Property Federation (BPF) was more supportive, noting the disaggregation of stamp duty on bulk house purchasing, potential changes to the UK REIT regime, a simplification of the planning system and allowing businesses to lead neighbourhood planning in predominantly business neighbourhoods - all of which the BPF had been encouraging the government to deliver. Liz Peace (left), chief executive of the BPF, said, “This is a budget that the property industry will want to get behind. It has a general thread that is supportive of enterprise and a number of issues on which our industry can genuinely feel it is being supported.

“We are particularly pleased that the Government has been willing to engage on issues such as planning reform, REITS and the stamp duty bulk purchase rules. The government has listened to ours’ and others’ representations and you cannot ask for much more than that."Some agents believed that the ‘something’ was better than nothing, Trevor Abrahmsohn, MD, Glentree International said, “First time buyers are getting a double whammy worth of benefit in today’s 2011 Spring Budget. Firstly, the government-assisted deposit for the needy of 20 per cent will fill the gap that has been so absent amongst this sector of the market which each year, as the market relentlessly rises, is disadvantaged. The two year holiday on Stamp Duty will also be very welcome, at the lower end of the scale, since in this sector every penny counts and to save the one per cent can make a noticeable difference to the affordability.Given the Chancellor’s limited room for manoeuvre I think this is the right thing to do at the right time. The prime and super-prime markets seem to be doing quite well of late and therefore if the lower end is stimulated to punch upwards and the top downwards this can only bode well for the middle income sector of the market. Frankly, I don’t think people were expecting too much and therefore something is better than nothing."

 

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