Call for more support to bring housing investment forward
The government’s Your First Home Scheme should help stimulate housing sales, but developers also need more support to bring housing investment forward, while the requirement for developers to contribute could fuel house price inflation, experts say.
Heather Powell, partner at audit, tax and business advisory firm Blick Rothenberg, said: “If developers are required to contribute to the scheme, prices for first-time buyers would have to rise to cover this additional cost, fuelling house price inflation. Developers are already struggling with viability as a result of higher construction and financing costs.”
Lawrence Turner, director at Boyer, said: “Your First Home is a welcome recognition that planning permission alone cannot deliver a new home. Housebuilders also need confidence that there will be buyers able to purchase the homes they have permission to build. Well targeted support for first-time buyers could therefore help viable schemes move from permission to construction.
‘Only part of the answer’
“But it’s only part of the answer. Infrastructure requirements and construction and finance costs can still stop consented schemes progressing. The detail of the Budget will be important; support should reach households who need it, while avoiding unnecessary upward pressure on new-build prices. If carefully targeted, the scheme could make a useful contribution to housing delivery, alongside measures addressing the wider barriers to development.”
Giuseppe Scozzaro, partner at Goodman Jones, said greater certainty of demand was particularly useful for SME developers. However, he said it was a demand-side measure which doesn’t address the significant challenges developers continue to face on the supply side.
“Rising construction costs, planning delays and requirements such as nutrient neutrality and biodiversity net gain can all affect the viability and timescales of developments,” he said.
“So, while this announcement should be welcomed, developers still need support to overcome the barriers to getting projects delivered profitably and on time. Stimulating demand is an important part of the equation, but it needs to be matched by measures that make it easier to build the homes that buyers need.”
Neil Leitch, managing director of development finance at Hampshire Trust Bank, also said that more is needed. “Unless government sorts planning, there is a danger much of this becomes pointless. There is little value in stimulating demand for new homes if developers still cannot get viable schemes through the system in a reasonable and predictable way.
“The requirement for participating developers to contribute towards the scheme also needs careful thought.”
