Autumn Budget 2018 – summary and member briefing

We’ve summarised the main announcements from the Budget that will be of interest to housing associations.

5 November 2018

Member briefing – housing in the Autumn Budget

This eight-page briefing summarises the six main announcements from the Budget that will be of interest to housing associations:

  1. Housing investment.
  2. Supporting people into homeownership.
  3. Planning for more homes.
  4. Universal Credit.
  5. Financial inclusion.
  6. Infrastructure and the Industrial Strategy.

Download the briefing, or scroll down to read our 'at a glance' summary.

Overall our response remains that this Budget was an opportunity missed to complete the housing supply jigsaw, by making the bold reforms required to fix the dysfunctional land market. In the video below our Chief Executive Kate Henderson gives a one-minute overview.

At a glance – housing in the Autumn Budget

  • Reiterating the announcement of an additional £2bn of long-term funding.
  • Announcing the next phase of strategic partnerships with £653m allocated to eight housing associations to deliver over 13,000 new homes. This announcement builds on the first wave of partnerships announced during the summer. The funding, alongside the ability to use it more flexibly, will enable these strategic partners to commit to a significant increase in development, driving genuine additionality.
  • Launching a new Help to Buy Equity Loan scheme from April 2021. This announcement was missing from the Chancellor’s speech, but included in the Treasury’s Red Book that underpins the Budget. It will be targeted at first-time buyers only, with new regional property price caps. These sensible measures are in-line with the proposals set out in the Federation’s Budget submission.
  • Ending the Help to Buy Equity Loan scheme after March 2023. This move is likely to cause concern among housebuilders who have become increasingly dependent on Help to Buy to sustain sales.
  • Extending the Stamp Duty Land Tax relief for first-time buyers to purchasers of all qualifying shared ownership properties. This is welcome, as it corrects a peculiar anomaly that previously saw shared owners excluded.  
  • Boosting the Housing Infrastructure Fund by an additional £500m, which has the potential to unlock more new homes. The £291m investment in the Docklands Light Railway is indicative of this, with the Government claiming the scheme will invest up to 18,000 new homes in East London.
  • Acknowledging the importance of diversifying the housebuilding market. This was announced through the creation of a new guarantee scheme, delivered by the British Business Bank, to support up to £1bn of lending to SME housebuilders.
  • Introducing a simpler system of developer contributions to provide greater certainty for developers and local authorities and enabling local areas to capture a greater share of uplift in land values. These measures are positive, but fall considerably short of the fundamental reform of the land system that is required. Reform to the 1961 Land Compensation Act would allow the capturing of more value from land profits with the potential to generate £1.6bn a year to put towards new affordable homes. It is disappointing that despite considerable support for these changes, the Government has not taken the firm action required. The Government has resolved to respond in full to the recommendations of the Letwin Review into Build Out Rates early in the new year.
  • Confirming the recent announcement that the Housing Revenue Account cap that controls local authority borrowing for housebuilding will be abolished. It was perhaps surprising that the cap was lifted immediately on the day of the Budget announcement, rather than the beginning of the 2019/20 financial year. The lifting of the cap provides opportunities for ambitious local authorities to increase their delivery of new homes and contribute towards boosting supply.
  • Responding to increasing criticism over the design and implementation of Universal Credit. This includes a package of additional measures of £1bn over five years to aid claimants’ transition to Universal Credit. This is absolutely necessary, as is the announcement that, from April 2019, Universal Credit claimants will benefit from a £1,000 increase in work allowances. It is vital that the promised £1bn cash injection is used to urgently resolve as many of the continuing issues experienced by claimants as quickly as possible.