Budget Comment: Chris Loughead, Fernham Homes

News Posted 04/03/21
Chris Loughead, Development Director for Fernham Homes, commented: “It’s great to hear that the Government will be offering increased support for buyers purchasing homes up to £600k.

“With the younger generation already struggling to get onto the property ladder, and the amount of unemployed 18 to 29-year-olds expected to reach 17%,* this 5% deposit scheme could be a lifeline for first time buyers or those with a growing family desperately needing to upsize.

“We expect that the new mortgage guarantee scheme will accelerate the emerging trend of buyers skipping a rung in the ladder, reinforcing the decline in demand of one and two-bedroom flats that we’ve already seen since lockdown. We anticipate a surge in demand for three-bedroom homes in particular, and have already had a swell of excited calls from buyers in the past week asking what they need to do to be in a proceedable position. I think there is a real possibility that this trend could lead to an overall change in strategy from mass housebuilders, instead concentrating on building family houses priced under the £600k threshold, rather than multiple units of flats, which in the short term could potentially lead to disproportionate supply issues that cannot meet this increased demand.

“The extension of the Stamp Duty holiday deadline should help enable those who are at risk of missing out on the relief from delays and prevent more fall-throughs, but this is just paper over the cracks on an archaic system of taxing that is in desperate need of modernisation. I would like to see the Chancellor consider a fairer version of the Stamp Duty tax going forwards, keeping transactions under £500k exempt indefinitely, and to look at measures that would enable equity-rich, cash poor downsizers to move, freeing up larger homes for growing families.

“It was disappointing not to hear of more support for SME developers in delivering housing of all tenures, along with further financial support to help us play our part in achieving the Government’s target of building 300,000 homes per year, to increase variety and quality, and avoid the market being further dominated by the Big Five. To achieve this, support will also be required for local planning departments to help deal with the extra demand in housing applications.

“An entire generation have been affected by the impact of Covid on their education and are arriving at a tough jobs market. It was good news to hear the Government lay out a clear plan of how they will provide much-needed support to school leavers and graduates, including supporting apprenticeships with £3000 hiring incentives and an additional £126m for traineeships. The housing industry has a variety of opportunities for graduates and apprentices that could easily be expanded.

“Finally, the Government has done a great job in getting Brexit over the line, however, the next step should be to continue supporting all business that conduct regular trade with the EU. We are currently seeing the cost of building materials such as bricks, shower trays and insulation increase significantly, and delays are becoming more and more common for numerous products. Although we have offset some of these issues to date by pre-empting and pre-ordering last year, the housebuilding industry needs urgent clarity on whether these trade routes will remain open and efficient. The property market is up against many obstacles right now: lockdown is reducing supply and transaction growth, and buyers are paying some of the world’s highest property taxes. Housebuilders that rely on European materials need assurances from the government that the housebuilding industry can progress at maximum pace going forwards. I hope to see some assurance from the Government on this in the coming months.”

*[according to the Resolution Foundation]

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