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Budget 2013: Deloitte comments on the impact of today’s Budget on UK housing

21 March 2013

James Pargeter, head of residential projects at Deloitte Real Estate, comments on the impact of today’s Budget on UK housing: “For the private rented sector, the £200m ‘Build to Rent fund’ announced in the Autumn Statement 2012 will be extended to £1bn, following significant over-subscription of the initial fund. This will support greater growth in this area, which should provide a faster rate of new housing supply into an area of significant demographic growth.

“For the right to buy sector, having raised the maximum discount to £75,000 in April 2012, the Government is extending this to £100,000 in London with near-immediate effect - from 25 March and, if combined with support under the ‘Help to Buy’ package, could have a significant impact on future rates of sale. The Government is also simplifying the process and reducing the qualifying time from five to three years, in order to increase this opportunity for social housing tenants. The challenge will be to use the receipts in a way which reflects the corresponding commitment to one to one replacement of homes sold.”

Pargeter continues on affordable housing: “The announcement of an additional £225m into the existing guarantee programme is stated to provide a further 15,000 homes to commence construction by 2015. Whilst welcome, the implied average level of support of £15,000 per home is less than the grant rate being delivered through the current HCA and GLA Affordable Housing Programmes (AHP).

“The sector is currently struggling to plan ahead for development activity beyond the end of the defined AHP period, at March 2015. The Budget states that long-term certainty to 2025 will be provided, but not until the 2015-16 Spending Round. There will be considerable pressure from the sector to provide guidance ahead of this, in order to prevent a slowdown in delivery beyond the current programme.

Pargeter continues on pay to stay: “It is proposed that social landlords will shortly be able to charge market rent to affordable housing tenants with income over £60,000, in order to ensure that they make a fair contribution. This is another example of the Government trying to generate value from the affordable housing sector in these austere times.

“The commitment to implementing ‘Zero Carbon Homes’ from 2016 is re-stated. A consultation on the next steps is promised by the Summer Recess. The time it will take for the industry to adapt in readiness for this may present a challenge, but we will actively participate in this consultation process.”

Ends

Notes to editors
About Deloitte Real Estate: Deloitte Real Estate redefines the concept of a full-service real estate business, offering a breadth of capability and an innovative approach unequalled in the market.

Our team combines traditional property services with financial and business advisory expertise to deliver integrated solutions on the most simple assignment to the most complex.  We apply a depth of insight drawn from our understanding of all industries and sectors to advise occupiers, lenders, investors and the public sector on every aspect of real estate in an increasingly complex world.

In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities.

Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

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