Osborne pledges 200,000 new homes

George Osborne has used his Budget to attempt to neutralise attacks from Labour over the government’s record on promoting the role of small and custom housebuilders with the creation of a £500m finance package for small firms and a “right to build” for self builders.

The chancellor’s Budget also confirmed a widely-trailed extension of the Help to Buy equity loan scheme, which has already helped 25,000 purchasers, from 2016 to 2020, backed by £6bn of government cash, as well as and plans to back a new “garden city” development in the Ebbsfleet quarry, in Kent, with £200m of investment.

Osborne said the measures in the Budget would support the construction of over 200,000 new homes.

The pledge to help small housebuilders and self and custom builders comes after determined campaigning from Labour on the issue, with the party pledging a proportion of public sites to be devoted to smaller players.

The budget documents said the new £500m Builders Finance Fund would be targeted at SMEs and would provide loans to developers to unlock 15,000 housing units.

In addition, Osborne said the government would consult on the creation of a new “right to build”, which would see custom-builders able to demand a plot from councils, supported by a £150m repayable fund, and designed to provide 10,000 plots in total.

The government will also make Help to Buy available to custom builders.

The Budget confirmed the expansion of the Help to Buy incentive for new build home construction, despite fears it will stoke a housing bubble.

The Treasury said the expansion would help a further 120,000 people buy a new home, in addition to the 74,000 expected to be helped by the current scheme to 2016.

To head off fears over runaway house price inflation in London and the South-east, Osborne said he had asked the financial policy committee “to be particularly vigilant against the emergence of potential risks in the housing market”.

Osborne said there would be a “prospectus” by Easter for councils to create their own “locally-led” proposals for new Garden Cities, following on from his confirmation of up to £200m to support the creation of a 15,000-home garden city in Ebbsfleet.

This will be backed by an Urban Development Corporation for the area, which was first identified as a priority for growth by new Labour under its Thames Gateway programme.

The coalition first promised to publish a prospectus on large-scale new developments in its housing strategy in 2011, but the document has been held up ever since in Whitehall wrangling.

Other housing measures included:

• The creation of another £150m fund to kick start the regeneration of large social housing estates
• The announcement the Treasury will work with the GLA on extending the existing Gospel Oak to Barking line to Barking Riverside, in order to support the development of the 11,000-home scheme there.
• The expansion of the punitive 15% Stamp Duty rate for homes purchased through a company structure. Currently this only applies to purchases above £2m, but Osborne announced this threshold would be lowered to £500k
• Further relaxation of changes of use in the planning system
• £100m for Cambridge to support its transport and infrastructure proposals designed to enable the construction of new homes in the area

Brian Berry, chief executive of the Federation of Master Builders, which represents SME builders, said the £500m fund was “much needed” as many major banks are still reluctant to lend to small residential developments.

“This additional support will provide the necessary finance to small house builders and help increase the overall supply of new housing through a well-functioning SME sector,” he said.

Grainia Long, chief executive of the Chartered Institute of Housing (CIH), also welcomed the package of measure for smaller builders and the emphasis on garden cities. “Historically we know that small and medium sized builders have played a critical part in delivering new homes,” she said.

“Following the credit crunch small builders have found it more difficult to access finance and government moves to help them get building by providing £500 million of support is welcome.

“If we are going to build the number of homes that we need to solve the housing crisis, garden cities and other new developments are going to be a huge part of the mix. The chancellor’s announcement of the Ebbsfleet garden city and developments in Barking, Riverside and Brent Cross is a welcome recognition of this.”

NHBC chief executive Mike Quinton welcomed the extension of Help to Buy.“The Chancellor’s announcement will give tens of thousands of people the opportunity to own their brand new home. Help to Buy has given the UK house building industry a shot in the arm. The extension now provides much-needed certainty and confidence for it to plan for the future.”