The construction and housebuilding industry did receive some good news from the Chancellor. Better than nothing, I suppose Mr. Osborne. So, what exactly was there to deconstruct in the Budget to help us start to construct? We look at the main points.
New initiatives were announced to boost the housing market .
The new Help to Buy scheme will work in two ways.
From April all buyers of new homes up to £600,000 will benefit from £3.5 billion of capital spending to support shared equity loans of 20% of the value of the new homes, with the buyer raising a 5% deposit.
And, from January 2014 for three years, buyers of new and second hand homes will be able to buy with a low deposit backed by a new government mortgage guarantee scheme supported by £130 billion of funds.
The chancellor described Help to Buy as a "dramatic intervention" in the housing market.
The chancellor also said the government would be investing in providing 15,000 new affordable homes as well as a five-fold increase in the Build to Rent fund.
The Home Builders Federation has “guardedly” welcomed the “Help to Buy” housing measures announced.
It said that the government’s proposal to extend FirstBuy – shared equity loans of 20% of the value of a new home – should open the market to more buyers, increasing housebuilding activity. With the government taking on the scheme, “this frees up developers’ balance sheets such that they can invest in new land and home building activity,” HBF said.
HBF welcomed the extension of the NewBuy mortgage guarantee scheme to all homes in the market, but warned that the initiative would need a wide range of lenders covering new and second hand build if the scheme was to boost housebuilding and improve the market.
The government also announced its commitment to more affordable homes funding and further funding for the private rented sector, both of which HBF supported.
“A lack of affordable mortgage availability remains the biggest constraint on housing supply, something government now clearly understands and is looking to address,” said HBF’s executive chairman Stewart Baseley. “Extending NewBuy to the second hand market should create churn in the market place and drive up sales across the board – including for new homes.”
Persimmon’s group communications director Steve Roche said: “We believe that these two initiatives will help create much needed movement within all levels of the housing market.”
The Chancellor also pledged to build 15,000 more homes.
Help to boost Infrastructure
Government department underspends will be used to fund infrastructure projects in plans
unveiled by the Chancellor George Osborne in his Budget speech. Mr. Osborne told parliament that government departments are expected to underspend by more than £11bn in 2013.
There is support for the £9.4bn High Level Output Specification (HLOS) which is the largest programme of investment in the railways since Victorian times.
There are UK Guarantees for major infrastructure projects such as the Northern Line Extension to Battersea and to Drax Power, which has been offered a guarantee worth up to £75m for the partial conversion of its power station from coal to biomass.
The Treasury also published an update on National Infrastructure Plan 2011, setting out progress on its Top 40 priority investments.
Reform is promised in the government’s approach to infrastructure delivery. It is described as “an enhanced central cadre of commercial specialists” from Infrastructure UK will be deployed across government and by this summer will establish new Infrastructure Capacity Plans for key government departments.
Mr. Osborne said: “We’re already supporting the largest programme of investment in our railways since Victorian times – and spending more on new roads than in a generation.
“We’re giving Britain the fastest broadband and mobile telephony in Europe.
“And the Treasury is now writing guarantees to major projects from supporting the regeneration of the old Battersea Power Station site to building the new Power Stations of tomorrow.
“We’ve switched billions of pounds from current to capital spending since the spending review. But on existing plans, capital spending is still due to fall back in 2015-16. I don’t think that’s sensible.
He said: “By using our extra savings from government departments, we will boost our infrastructure plans by £3bn a year from 2015-16. That’s £15bn of extra capital spending over the next decade.”
Pinnacle Consulting hope that these initiatives will be good news for manufacturers and distributors of building and construction products as well as builders and engineers.