Budget 2011: Housing and Construction

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We examine some key highlights affecting housing and construction policy, including reaction from ePolitix.com members.

• Stamp duty levied on the mean value of houses purchased within a portfolio.

• Bank levy proceeds will be used to fund a £250m ‘First Buy’ shared-equity scheme to help 10,000 first-time buyers.

• Support for mortgage interest scheme to be extended until January 2013.

• New planning rules to require planners to prioritise growth and jobs with a new presumption in favour of sustainable development, while retaining existing controls on green belt land.

Member Response: Bob Pannell, chief economist, Council of Mortgage Lenders

"Chancellor Osborne has adhered closely to the fiscal script set out in his first Budget. Today's indirect tax announcements will marginally soften the impact of significant fiscal cuts for household finances, but do not alter our forecast of a challenging year for households and the housing market this year."

Member Response: Neil Sinden, director of policy, Campaign to Protect Rural England

The planning measures present a potentially devastating threat to the countryside and are unlikely to boost long-term economic growth. To suggest, as successive governments have done, that planning is a key impediment to growth is just wrong. It is disappointing that George Osborne is repeating the mistaken assertions made by Gordon Brown.

The planning system exists to prevent unsustainable, unwanted and environmentally damaging development. Today's Budget is likely to undermine its ability to do this.

Member Response: Michael Ankers, chief executive, Construction Products Association

The proposed planning changes are very welcome as they recognise and address some of the difficulties faced by industrial and commercial development. By encouraging the planning process in favour of jobs and growth with a presumption in favour of sustainable development, will hopefully avoid unnecessary delays by local authorities and help stimulate economic activity. Similarly the investment in 21 Enterprise Zones will also encourage much needed investment and expansion in a number of regions across the country.

Turning to housing we are pleased that the Chancellor has recognised the enormous difficulty the housing market has been facing for several years and the introduction of financial help for first time buyers is a much needed boost. However, this is a very modest step and is unlikely to make much of a dent in the 100,000 shortfall of new build that this sector is currently facing.

Member Response: Roger Humber, strategic policy advisor to the National Federation of Builders

While the proposal for equity mortgages funded by the Treasury and housebuilders will help a small number of volume builders to maintain their sales to first time buyers, most small and medium sized builders either do not have, or have already exhausted, their own balance sheet capacity to provide this kind of assistance. They would need more access to bank lending than they have had in recent years to be able to participate."

We welcome, in principle, the commitment to reduce the cost and bureaucracy of planning but await the detail on exactly how a presumption in favour of sustainable development, to make 'yes' the default position, can be reconciled with a plan-led system.

Greater freedom to secure change of use from employment to residential could be helpful in certain circumstances, while the opportunity of ending the over-reliance on building on previously developed land (PDL) is welcome.

This contributed significantly to shortages of land for housebuilding before the recession. However, making this subject to localism may significantly reduce its effects and could even have the opposite effect to that intended, with greater emphasis being put on PDL where little exists.