Following new chancellor Philip Hammond’s first – and, it transpires, last – Autumn Statement, there are many questions around how it will affect the housing market, homeowners and those looking to get on the property ladder.
The Council of Mortgage Lenders (CML) has summarised the key points from the speech, how they are likely to affect you, and when they will come into practice.
The main new policy announcements within the Autumn Statement of interest to the mortgage industry include introducing tenure flexibility across the Affordable Homes Programme by relaxing restrictions on grant funding, and confirmation that the HM Land Registry will remain in the public sector.
The chancellor also announced that the government will move to a single major fiscal event each year. This means following the spring 2017 Budget, future Budgets will be delivered in the autumn, with the first one taking place in autumn 2017.
The theme of fiscal retrenchment featured less, as the chancellor pushed out the aim of balancing the books into the next parliament. Net borrowing is now forecast to fall more slowly over the forecast period, from £68.2 billion in 2016-17, to £20.7 billion in 2020-21. This means borrowing will be £27.7 billion higher in 2020-21, than was expected at the time of the Budget this year and £110.2 billion higher over the five year period.
GDP growth was revised up slightly for 2016 to 2.1 per cent, but revised down for 2017 and 2018, with growth expected to be 1.4 per cent and 1.7 per cent, respectively. The economy is then expected to grow at 2.1 per cent in 2019 and 2020, before settling at 2.0 per cent in 2021.
Supply of property
The government will publish a Housing White Paper shortly, setting out a package of reform to increase housing supply and halt the decline in housing affordability. To help deliver this, the Autumn Statement announced the following measures:
- Housing Infrastructure Fund – a new Housing Infrastructure Fund of £2.3 billion by 2020-21, funded by a new National Productivity Investment Fund (NPIF) and allocated to local government on a competitive basis, will provide infrastructure targeted at unlocking new private house building in the areas where housing need is greatest. This will deliver up to 100,000 new homes. The government will also examine options to ensure that other government transport funding better supports housing growth.
- Affordable homes – the government will relax restrictions on grant funding to allow providers to deliver a mix of homes for affordable rent and low cost ownership, introducing tenure flexibility across the Affordable Homes Programme to meet the housing needs of people in different circumstances and at different stages of their lives. The NPIF will provide an additional £1.4 billion to deliver an additional 40,000 housing starts by 2020-2.
- Accelerated construction - In early October, the government announced that it would pilot accelerated construction on public sector land, backed by up to £2 billion of funding. To meet this commitment, the government will invest £1.7 billion by 2020-21 through the NPIF to speed up house building on public sector land in England through partnerships with private sector developers. The devolved administrations will receive funding through the Barnett formula in the usual way.
Right to Buy
The government will fund a large-scale regional pilot of the Right to Buy for housing association tenants. Over 3,000 tenants will be able to buy their own home with Right to Buy discounts under the pilot.
Letting agency fees
The government will ban letting agents’ fees to tenants, in order to improve competition in the private rental market and give renters greater clarity and control over what they will pay. The DCLG will consult ahead of bringing forward legislation.
HM Land Registry
Following consultation, the government has decided that HM Land Registry should focus on becoming a more digital data-driven registration business, and to do this will remain in the public sector. Modernisation will maximise the value of HM Land Registry to the economy, and should be completed without a need for significant Exchequer investment.
NS&I Investment Bond
To provide support to savers, NS&I will offer a new market-leading three-year savings bond. The indicative rate is 2.2 per cent but this may be adjusted to reflect market conditions when the product is launched. The bond will be open to those aged 16 and over, subject to a minimum investment limit of £100 and a maximum investment limit of £3,000. The product will be available for 12 months from spring 2017.
The CML is the main trade body representing UK mortgage lenders. Its members together account for around 97 per cent of the nation's residential lending. For more information visit The Council of Mortgage Lenders website.
For news and advice on the latest financial and economic developments that could affect your household, visit Avant Life.