Adam O’Brien, Managing Director of Metis Homes, said: “Given the UK economy is heading for recession, I wasn’t expecting the new Chancellor to deliver a giveaway Autumn Statement, but I am underwhelmed nonetheless. There was no mention of a tangible focus on planning reform, without which there is zero chance of hitting the government’s own housing targets. Without a solid housing market, the economy will continue to suffer.
“The government must give us the ability to obtain planning permissions for well-conceived schemes in a timely fashion. We need a realistic chance of building efficient houses without having to mitigate obscure environmental issues like phosphate, nitrate, and water neutrality, that arrive without warning and come with impossible parameters to grapple with. Some much-needed streamlining will mean more houses get built, which will in the long term make them more affordable.
“In the meantime, a scheme to help people get on the ladder to buy new homes - which are inevitably more energy efficient - may be key. Help to Buy had its critics, but the long-running scheme undeniably helped to strengthen the market and facilitate more home ownership. Is it wise to remove this altogether without some sort of replacement stimulus, at a time when affordability is more challenging than ever?
“Fundamentally, where is the tangible support for the new homes industry, behind all the recent rhetoric about making planning and housebuilding “easier”, “less ugly” and “levelling up”? We have a planning system on its knees and growing regulation - particularly from Natural England - is keeping it down. Local authority planning departments need to become an inviting and lucrative place where people want to work. It’s a cultural shift that’s needed and this cannot happen without funding. Below-inflation pay rises are not going to help to achieve this.”
Mike Burton, Land Director for Metis Homes, said: “Public sector funding not tracking inflation will lead to a real terms reduction in the funding of planning departments, compounding the resourcing issues that they already face, which is one of the key problems with the planning system. It will also likely lead to public sector pay not tracking inflation, further reducing the pay of planning and development management teams, and restricting their homebuying purchasing power. It sets a tone for the wider employer base as well. If businesses follow suit and increase salaries at a below inflation amount, the net position will be a population with less buying power and therefore a lower level of affordability for house purchases.
“Meanwhile, not raising income tax thresholds and lowering the top level will affect affordability and buying power for the whole working population. More people will be dragged into higher tax brackets, which will result in less net income in real terms, negatively impacting the ability to secure and pay down an affordable mortgage.
“Raising corporation tax to 25% will impact SME housebuilders, who often live hand to mouth and cannot weather increased tax costs in a period of choppy waters. We face an uncertain economic outlook, numerous pressures on profitability – including the prospect of decreasing house prices and increasing costs, plus significant delays, due to public sector inefficiency – meaning that we must look to protect what is left. An increase in taxes feels materially imbalanced and removes the incentive for SME businesses to be entrepreneurial.
“The announcement that the £425,000 Stamp Duty threshold for first time buyers is now temporary until March 2025 is a further retrenchment from the previous administration’s Mini Budget. Whilst it may in the short term provide some motivation for people to buy and not sit tight, it is unlikely to materially stimulate the market in the way that changes to Stamp Duty thresholds did during the Covid-19 pandemic. What it does do is make it more challenging to forecast business performance beyond the Stamp Duty period changing – another nuance that SME housebuilders will have to now change their plans for.”