The response to the Coronavirus pandemic took centre stage in Chancellor Rishi Sunak’s Budget today, but there was still plenty of new spending and new policy announced in what has been called the most significant spending budget since 1992.
To help guide you through all of the latest policy announcements and spending commitments, we have brought together some of the leading commentary from figures across the real estate world to analyse what the Budget means for the industry and suggest what the Government could have done better or differently.
The Oxbridge Arc
One of the highlights of the budget for the Blackstock team was seeing the work we’ve done around boosting the Oxford-Cambridge arc come to fruition.
Working with Oxbridge specialists Bidwells and global architects Perkins and Will, we launched the Radical Regeneration Manifesto last October to set out a range of policy ideas to turbo-charge the Arc and support the UK’s long-term growth and prosperity.
One of the key ideas set out in our manifesto was an Olympic Delivery Authority-style body to help drive development in the region. Today, the Chancellor announced a new long-term spatial framework for the Arc, and that the government will examine the case for four new development corporations in the area, echoing what our think tank has called for.
Patrick McMahon, senior partner at Bidwells, said: “If we want to see growth in the Oxford-Cambridge Arc treble in the next century, which would be the ambition for a U.S. style innovation district, we need sustainable but radical solutions. The Arc is about much more than just Oxford and Cambridge. Towns such as Bletchley, Bedford and Northampton have enormous potential so the Government needs to make sure they’re bringing these locations along on the journey. The way to do this is by creating the right delivery vehicles and increasing infrastructure investment so that investors have the confidence to invest locally.”
Steven Charlton, managing director at Perkins and Will, said: “We have to compete on a global canvas and decisions around where companies invest will take into account Government commitments to transport, infrastructure and education. The prize for Britain is a post-Brexit boom, centred on science, technology and life-sciences, that could mimic some of the superclusters we see across the U.S. and China. But investors need greater planning certainty and we need to amplify our use of data to help inform decision-making.
“At the heart of innovation districts are anchor tenants – such as academics or major tech firms – but their success depends on great transport links and a focus on sustainable development. Take Silicon Valley for example, where the Santa Clara Valley Transportation Authority runs bus and light rail services that reach every corner of the tech hub with standard one-way fares costing as little as $2. The Arc must strive to replicate such successes.”
One of the headline spending commitments from the budget was the government’s intention to triple spending on transport and infrastructure. This will bring much needed investment to the UK’s regions and also help boost productivity by up to 2.5% according to the Office for Budget Responsibility.
Martin Bellamy, chairman of This is Gravity, said: “I welcome the Chancellor’s commitment to raise infrastructure spending to its highest level for decades.
“But to make a difference and truly level-up the UK, this infrastructure spend must be focussed on boosting regional connectivity across road and rail across the entire country. The North is in need of the investment, but so is the South West for example, which is too often forgotten when it comes to investment.
“Better regional and local connectivity is crucial if the UK is going to be a viable country for developments like Gravity’s 635-acre smart clean campus in Somerset that can host innovative companies at scale and create thousands of local jobs that will enable business and government to pivot the UK’s economy to a cleaner one.
“We have the chance as a nation to lead the clean growth revolution, create thousands of jobs, and make our economy fit to tackle the most pressing issue of our time – climate change. Infrastructure has a fundamental role to play in delivering that – but it has to be a nationwide upgrade.”
There had been speculation that the Budget would make major changes to stamp duty which did not materialise.
However, there were changes to the rules concerning foreign buyers, who now face a 2% increase in stamp duty. While this may level the playing field for domestic buyers it could cut off a crucial source of development finance for London in particular.
Mary-Anne Bowring, group managing director at residential property consultancy Ringley, said: “The falling pound has made housing more affordable to overseas buyers, while domestic buyers have had to contend with stagnant wage growth and ultra-low interest rates pushing up prices and eating away at their ability to save. An increase in stamp duty for overseas buyers will simply put things back to where they were before the Brexit vote and level the playing field for domestic buyers.”
Dean Clifford, co-founder of Great Marlborough Estates, said: “The Boris bounce could easily turn into a belly flop with damaging policies such as extra stamp duty for foreign buyers, and it is London that will end up worst affected.
“The capital has the most globalised housing market of any UK city and while there has been a lot of criticism of ‘off-plan’ sales to overseas investors the fact is they provide a crucial source of development finance. London already contributes the lion’s share of stamp duty revenue too.
“Talk of a ‘Lights Off London’ being created by foreign buyers snapping up homes and leaving them empty is largely a myth. London has one of the lowest rates of empty properties of any UK city. Vacant homes are far more common in deprived post-industrial areas, where people don’t want to live as there are no decent jobs available.
“If Boris wants to power up the regions, we need to see serious investment into infrastructure and education to boost productivity and skills, not punitive taxes that will damage the UK’s most economically successful city.”
The government has ramped up spending on much needed affordable housing, promising £12bn over this Parliament. While there is always the argument more could be spent, this will undoubtedly take pressure off the private sector and potentially boost demand for off-site manufactured homes.
Dave Sheridan, executive chairman at ilke Homes, said: “Affordable housing provision cannot be funded by private sector contributions alone and the Chancellor’s multi-billion pound boost for the Affordable Homes Programme is a timely, positive intervention that will benefit the whole market.
“However we cannot continue to rely on traditional methods of delivery if we are to build the quality homes that Britain deserves at speed and scale, and the government needs to work with the industry to encourage uptake of modern methods of construction.
“Affordable housing providers such as housing associations and local authorities are uniquely placed to benefit from off-site manufacturing. Reduced build time means they can deliver much needed affordable homes at pace while superior build quality delivers energy efficient homes and reduces maintenance costs.
“In turn, a properly funded affordable housing sector can help the off-site manufacturing industry grow by providing a steady pipeline of work that can support demand even during a downturn when private sector activity is reduced.”
Sunak announced a new £1bn Building Safety Fund, to help remove unsafe cladding from buildings above 18m tall. While the fund offers much more than initially pledged by the government, it is unlikely it will cover all the costs needed
Mary-Anne Bowring, group managing director at residential property consultancy Ringley, said: “More than 1,000 days since Grenfell, the Government has shown that it is still not ready to act at the scale needed for the cladding crisis. We cannot simply wait for the next crisis to happen, while millions of people are left unsure over the safety of their building.
“There needs to be an acceptance of the scale of the problem and today’s sums just simply are not enough.
“The crisis goes far beyond removing Grenfell-style cladding. Even leaseholders who have had their cladding found safe are still unable to remortgage or sell their properties due to the challenges of getting a signed EWS1 form. It is not just about dangerous cladding, it is about retrospectively tracing the physical construction of the building, and testing how all the components and layers of the building act together. Support is needed for leaseholders and freeholders alike to navigate the process of getting their homes certified as safe, as we have to retroactively re-create the ‘as built’ reality of the homes people are living in.”
The government recommitted itself to promoting the UK’s fintech scene, which is the largest in Europe, announcing a new working group that will be headed by Ron Kalifa OBE, a non-executive director at the Bank of England and Transport for London and who has led a string of start-ups.
Franz Doerr, founder and CEO of flatfair, said: “I welcome the Chancellor’s announcement to support the UK’s world-leading fintech sector, along with the wider digital economy. Harnessing technology to solve everyday problems has the power to transform millions of consumers’ lives, whether that is how they shop, bank or even rent. Innovation always requires nurturing and support, but also investment. Making sure the UK is primed to incubate and host fintech companies will only help the sector keep attracting the much needed capital from venture funds and private equity that is so vital for its growth.”