Budget 2009- what does the property industry want from Darling?

By Sarah Garrod

Alistair Darling will announce his Budget for 2009 next Wednesday.

In the second of this two-part disscussion we look at why the environment, construction and first-time buyers will all be key topics for the Chancellor.

Getting the construction sector going again has been a priority for most property workers, especially given the decision not to increase builders wages this week.

With social housing lists increasing and construction firms going bust, the need to Get Britain Building has been one echoed across the industry.

Richard Diment, director-general of the FMB, says: "The facts speak for themselves.

We have been under building for years.

"We need 223,000 new homes per year to keep up with demand but were only building 185,000 a year before the crash. Last year we built 80,000 and this figure will fall to 70,000 this year. It is clear that we have a massive housing supply crisis and this is only going to get worse not better unless the government takes strong and decisive action.

"A fiscal stimulus of £5 billion would create as many as 55,000 new jobs in the construction sector which is experiencing its worst recession since 1980."

Earlier this week the FMB reluctantly announced that the Building and Allied Trades Joint Industrial Council (BATJIC) would be unable to increase pay rises for construction workers until June 2010. The move was reflective of the mood across the building sector, with the FMB predicting 90,000 redundancies in the first half of this year.

David Bexon, managing director of SmartNewHomes, says: "The government has pumped billions of pounds into the banking sector with the aim of giving mortgage lending a shot in the arm. While there are now tentative signs of improvement in mortgage availability, any impact resulting from government intervention has taken far too long to filter through and aid developers.

"New home starts have been severely damaged by the lack of mortgage finance and the resulting house price decline. As things stand, developers will be neither financially or personnel equipped to meet the current pent-up demand once the market begins its recovery."

Making lending more accessible and helping first-time buyers to take advantage of falling house prices will be key to Wednesday's Budget.

The plight of the first-time buyer has been highlighted again and again, as interest rates and property prices have made the first rung on the property ladder much easier to reach. However, the lack of lending in recent months has blocked the door for many, so increasing the availability of mortgage finance could prove an interesting one to watch come Wednesday.

As part of their 'Five Point Plan to Help the Housing Market' the NAEA have called on Darling to boost liquidity to free up lending and improve access to finance for first -time buyers.

Nick Hopkinson, from PPR agrees. He says: "Concerns over restricted lending remain a central and challenging issue.

"The banks are profiteering from the low base rate but on the whole, are still not passing on more attractive rates to help ease the pain for borrowers. The government must use its influence to get those banks under its control offering realistic and accessible mortgages. I am not calling for a return to irresponsible lending, but for rates that reflect the Libor and base rates."

The CML also want changes brought in for borrowers. They are calling for better state support for borrowers in difficulty through wider access to Income Support for Mortgage Interest (ISMI) and mortgage rescue.

The CML says: "We acknowledge that, since the beginning of this year, the government has made ISMI more widely available for households that lose all their income. We welcome this improvement, but it will only provide modest, short-term help for a small number of customers. It is nowhere near ambitious enough to have a significant impact on the levels of possession we might see in a deep recession.

"We also welcome the new mortgage rescue scheme, which will help some of the most vulnerable borrowers facing homelessness. But a scheme expected to help 6,000 households over two years is similarly unambitious, compared to the scale of the problem."

Finally, green issues have already been in the news because of the controversial eco-town developments, but what do those in the property industry want from the Budget on this all important matter?

Kevin Brennan, head of sustainability, VELUX Company Ltd, says: "The green agenda must not suffer as a result of the current economic crisis. The Chancellor has a responsibility to incorporate significant green initiatives into this budget and I expect to see a number of proactive measures announced next week.

"It is essential that the renewables sector is at the heart of any future plans. Improving the energy efficiency of the UK’s existing housing stock is key to significantly reducing the UK’s carbon emissions and will also help to reduce consumers’ fuel bills too – never more important than at a time when consumer finances are stretched.

"We need to see financial support for schemes to make existing homes more energy efficient if we are to make any significant headway towards meeting the UK’s commitment to cut green house gas emissions by 80 per cent by 2050.

"I would like to see the launch of a range of meaningful financial incentives and a government accreditation scheme to assist homeowners when installing measures such as solar thermal into their homes. Not only will investment in this sector help to reduce the UK’s carbon emissions but it will help to create jobs and ensure the continued survival of those essential organisations investing in the manufacturing and continued advancement of renewable technologies."

The FMB have also said building greener homes and making environmentally friendly improvements to the existing housing stock could go a long way in helping create jobs in the construction sector. Mr Diment says: "Measures to kick start the house building industry and promote the retro-fitting of our existing homes to make them greener and more energy efficient offers the best hope to the Chancellor to put Britain back on the road of economic recovery."

So what is the property industry asking from Mr Darling?


The Royal Institution of Chartered Surveyors (Rics), have asked the Chancellor for an analysis of existing measures:

Build on the success of Homebuy Direct
Ensure support is in place to help households threatened by repossession
Direct funding for affordable housing to new developments rather than purchase of existing stock
Ensure additional money for capital projects is having an impact on the ground

As well as 'preparing for the upturn' by:

Coordinating schemes and policy measures on professional skills
Use a stamp duty holiday to move to longer term reform of the tax
Reduce the additional burden on businesses caused by empty property rates
Introduce an intelligent regulatory system that protects clients and the economy and enables businesses to flourish.

Lee Bramzell, chief executive of PropertyIndex.com, says: "If the Budget is to spearhead economic recovery, it is essential that measures to revive the housing market form the cornerstone of Darling’s initiatives. While the Chancellor clearly faces the extremely difficult task of striking the correct balance between easing the cost of borrowing while not failing to acknowledge the nation’s savers, it is clear that consumer confidence needs an urgent boost and must be at the heart of his plans for the future."

Nick Hopkinson, director of Property Portfolio Rescue (PPR), says: "Despite spurious reports of ‘green shoots’ over recent weeks the reality is we still have a long way to go before we are back on track. Unemployment is set to soar in 2009 and as a result consumer confidence and consumer spending will continue to wither, with the housing market one of the greatest casualties. It is up to the Chancellor to demonstrate a series of robust and pragmatic policies if he is to drive this county out of recession."

The CML says: "The forthcoming Budget represents an opportunity for the government to implement a small number of measures to underpin the housing market and help vulnerable households who fall behind with their mortgage payments."

Peter Bolton King, chief executive of the National Association of Estate Agents, says: "This Budget provides the Chancellor a perfect opportunity to consolidate and build on recent figures that show confidence returning to the housing market.

"People across the UK want to buy property and own their homes and the government can and should do more to help them."

Richard Diment, director-general of the FMB says: "We are sinking deeper and deeper into a massive housing crisis, and we cannot afford to use the state of the economy as an excuse for doing nothing about it.

"For too long the government has off loaded its responsibilities for housing and infrastructure onto the private sector. Now that the market has finally collapsed, the government needs to face up to its responsibilities or it will face mass homelessness as well as mass unemployment."

David Bexon, managing director of SmartNewHomes.com, says: "The Budget is the Chancellor’s opportunity to support the housebuilding industry, which has been among the heaviest hit in terms of output and redundancies, and show an ability to think laterally on housing’s key role in combating the recession.

"I urge the Chancellor to allocate funds to developments that have been held up due to the credit crunch, offer support for developers in their obligations to deliver social housing, and remove some of the red-tape that works to delay the planning process."

Wednesday's Budget, whatever is announced, will have serious implications for the property sector. Chancellor Alistair Darling will make his announcement to the House of Commons on April 22nd at 12:30pm.