Jan Crosby, head of housing for KPMG in the UK, comments on the lack of measures in today's budget to increase the supply of homes.
“Today’s Budget lacked a real focus on fixing the housing crisis with its focus on changes to taxation and rents, rather than investment in house building and supply. While the Chancellor announced the controversial ‘pay to stay’ tax, which may bring in further income for local authorities and housing associations, he also announced a 1 per cent drop in social rents over the next four years, which those same authorities and associations will need to find the income to make up. These two announcements together mean we’re unlikely to see a large surplus to put into build programmes.
“What the sector needs is comprehensive supply-side change. We need to see announcements on land and planning to get Britain building. While Monday’s announcement on the Housing Growth Partnership gives SME builders a shot in the arm, it will be ineffective if they don’t have the sites to build on or face red tape when they do manage to secure much-needed land.
“And yet the Chancellor focused on demand again when he mentioned the Help to Buy ISA, which was first announced back in March. Now, as then, this is set to have an inflationary effect by creating yet more demand without the homes being built to meet it. The housing crisis is now so severe that by the time it takes the average person to save £12k in the ISA, the price of an average house will have soared by £50k, based on OBR statistics.
“But lack of supply doesn’t just impact on home ownership or social rent, it also has a huge impact on the private rented sector. Rents there are increasing and will continue to do so – why? Demand versus supply yet again, and the need for landlords to increase rents to sustain yields and prices go up. We simply need more homes in every tenure.
“The potential light in this darkening crisis is the possibility of planning reforms being announced on Friday – if changes aren’t made we face a difficult and disappointing four years for housing.”
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Frances Shennan, Corporate Communications Manage
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a turnover of £1.9 billion in the year ended September 2014. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 162,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.