JLL Residential

JLL responds to housing promises pledged in the Autumn Statement welcoming the support for new affordable homes

London, 25th November 2015. Felicity Young, +44 (0)20 7087 5108

Adam Challis – Head of Residential Research at JLL comments: "The chancellor's support for 400,000 new affordable homes is welcomed at a time when there is a dire need to expand housing construction right across the country. This Government's narrow focus on home ownership is a serious concern however. Support for the private rented sector and social housing is vital to protect the financial stability of millions of households, for whom ownership is beyond reach.

"The private rented sector is the fastest growing tenure in the UK and deserves direct support through the planning system and through the release of public land. Social housing investment provides vital security to more vulnerable households, while also reducing the heavy current reliance on temporary accommodation.

"Housing delivery desperately needs long-term planning rather than short-term interventions. They are disruptive to construction programmes and ultimately weaken the system of delivery. Housing should be viewed as infrastructure that protects household stability and supports economic growth."

Commenting on the additional rate of stamp duty on buy to let properties and second homes announced today, Challis continues: "A 3% increase in Stamp Duty for investors and second-home purchasers is an incredibly blunt instrument to deal with a complex set of housing market issues. In principle this will reduce the competition between first-time buyers and investors for many properties, while also dis-incentivising some second-home purchasers. However, there are a number of negative impacts from this change. First, a reduction in the viability of investment will reduce rental market stock - the fastest growing tenure – in the UK, which will put immediate upward pressure on rents. This is a very important part of the housing market, with 110,000 buy to let purchases in the last year alone. This stock is vital to meet the growing rental demand.

"New build properties are heavily reliant on off-plan investors to trigger development finance. A reduction in demand from this group will dramatically reduce the viability of many new build schemes, reducing supply. It is extraordinary that the Chancellor has not ring-fenced new build property from this change, as it will act in direct contradiction to the raft of Government policy designed to expand the rate of housing construction.

"Many holiday home locations, notably in rural and coastal communities, should see some of the pressure on local housing markets reduced. This may be the one element of the Stamp Duty change that makes sense, as it will help protect the vitality of these local communities.

"Finally, this is yet another targeted intervention into a housing market that is in dire need of long-term decision making. The raft of policy changes are incredibly disruptive to market activity and create uncertainty, that results in dis-investment. The Government does not seem interested in the market distortions it causes through its actions."

Richard Petty, Lead Director Residential Advisory at JLL comments: "Whilst we welcome the government’s initiatives to increase housing supply, and in particular the delivery of new affordable homes, we are concerned that nearly 90% of the new homes announced over the life of this parliament will be for ownership, leaving potentially only about 50,000 for affordable rent. We must not lose sight of the fact that, for many people and families, owning their own home will remain unattainable even with the discounts and opportunities available. Housing will remain expensive to buy and costly to maintain. We need to provide good homes for those people as well, and that is where housing associations have the leading role to play. They need the government’s funding and support as well as, if not more than, aspiring owners."