OBR should take charge to ensure Budget does not harm housing policy and delivery, says committee
The Office for Budget Responsibility (OBR) should be responsible for ensuring Budget policies do not impede housing policy and delivery, an independent committee has said.
The Housing Policy and Oversight Committee said the OBR should assess each measure, such as Your First Home. Chancellor John Healey (pictured) is expected to reveal the details of the first-time buyer scheme at the Budget later this month.
Sir Vince Cable, chair of the committee, said: “Housing can be a tremendous engine for growth in the economy, and we support all efforts to improve quality and delivery. In fact, it is integral to so many aspects of the economy that we believe it would be helpful for any budgetary measure to be assessed for impact on the market.
“The OBR is a natural place for that to happen.”
Getting Your First Home right
The Housing Policy and Oversight Committee said the Your First Home scheme was generally supported but said the developer contribution from SMEs should be lower to encourage participation.
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The committee said the application process should be “fast-tracked” to avoid a slowdown in the market. It also said the Your First Home scheme was likely to be facilitated digitally, compared to the analogue Help to Buy process, adding that the introduction of a digital system could delay the scheme.
Cable said the initiative could be a “stimulus to the market” and encourage builders to develop faster.
“They need certainty and simplicity, and we hope the Budget will fill in some missing details. Most importantly, we are concerned to see an application process that is in place as soon as possible so that potential market distortion through purchases being deferred is avoided,” Cable said.
He added that he was initially opposed to Help to Buy policies, but felt the new scheme would “stimulate new building without creating inflation”.
The committee joined calls to make changes to stamp duty, suggesting a return to the thresholds implemented during the Covid-19 pandemic, when the tax did not kick in for purchases below £500,000.
The Housing Policy and Oversight Committee said this stimulated the market while offsetting any revenue loss, as activity generated income in other sectors. Alternatively, the committee said first-time buyers and downsizers could be exempt from stamp duty, noting that the tax disincentivised moving.
It also recommended abolishing VAT on household extension and refurbishment projects.
Remove planning barriers
The committee said the new building regulatory regime improved on the previous “onerous” planning regime, but the “one-size-fits-all” approach was disadvantaging SMEs. It said more consideration should be given to exempting smaller sites from “some of the more onerous non-safety regulations”, which would in turn enable planning offices to focus on larger applications.
Cable added: “Planning reform has been introduced, and much was essential after the Grenfell tragedy. However, the full impact is likely to take more than a single Parliament to work through. The immediate effect is that it makes developments by SMEs much more difficult as they do not have the resources to work through all the requirements. This concentrates activity in the major housebuilders.
“Work should identify small developments with less onerous, non-safety-related requirements, to encourage the SME sector. That would also free up planning officers to concentrate on larger developments, leading to swifter decisions.”
