At first glance, Rishi Sunak’s Budget speech earlier this week didn’t offer much from a property perspective.
But digging down a little bit deeper there are a number of possible opportunities for agents when it comes to the new-build sector and marketing homes to first-time buyers, investors and others.
The government’s spending priorities will always have significant long-term effects on the property industry. As the country continues its slow but steady recovery from the financial and social effects of the Covid-19 pandemic, which led to lockdowns causing a 10% drop in the economy and the government spending over £100 billion on job support through schemes such as furlough, Sunak sought to paint a positive, upbeat message about the country’s future post-Covid.
While more positive growth, unemployment and borrowing figures helped to back up the rosy vision he set out, it’s also the case that he warned of tough months ahead as inflation continues to rise at worrying levels, pushing up the cost of living for many.
From a property point of view, there were no major housing proposals or changes to the property taxation system – the latter had been heavily speculated on – but the Chancellor delivered plans which seems to prioritise building more homes and had little mention of tax hikes or the private rented sector. In fact, lettings were almost completely ignored in the speech.
This ties in with the Prime Minister’s recent speech at the Tory Party conference in Manchester, where he placed a heavy focus on homeownership.
The plans for more housing can create opportunities for agents who enter the new-build market, offering a more diversified, adaptable stream of revenue.
A brownfield land revolution
According to Sunak, the government will provide a hefty cash injection of £11.5 billion to build up to 180,000 new, affordable homes.
During the Budget speech, Sunak explained: “We are investing an extra £1.8 billion, enough to bring 1,500 hectares of brownfield land into use, meet our commitment to invest £10 billion in new housing and unlock a million new homes.”
By building properties on brownfield land, neglected urban spaces can be transformed for the better. As a result, they can help create more communities in England and make use of the land that has been abandoned over the years. Campaign to Protect Rural England's annual statement of brownfield report shows that there is enough suitable brownfield land available in England to supply over one million homes, so this is a definite step in the right direction.
During the announcement, Sunak did not clarify the type of housing that will be built, however we are optimistic that the new builds will be targeted all types of buyers – from first-time buyers to investors. With senior living also becoming increasingly popular, it is likely that a portion of these new developments will be targeted at the older end of the market as the UK population continues to age.
An increase in affordable housing stock
With rising inflation and energy bills, the cost of living continuing to rise, which means that ensuring properties are affordable is more essential than ever. While a rise in the national living wage and a tapering of the cut to Universal Credit were also announced, which are likely to impact homeowners and prospective homeowners on a lower pay rate, there has long been an affordability issue in the UK which needs to be addressed with genuinely affordable homes.
In a five-year forecast put forward by Savills, it has been predicted that there will be a 12.4% house price increase by 2025. The supply and demand imbalance is the main reason for the house price increase, something an increase in affordable housing stock could help to tackle.
The latest investment pledges for affordable homes from the government are welcome, but they will need to be backed up in bricks and mortar.
In the meantime, agents can take advantage of the rise in housebuilding by partnering with new-build and retirement living developers to market homes to the correct audience on their behalf.
As I’ve discussed before, it’s important for agents to diversify their offerings – whether that be by linking up with retirement developers or including part exchange in their pitch to developers, offering them more safety and security.
The latest announcements from Rishi Sunak are only going to make the new-build and retirement living sectors more attractive, with many brownfield sites across the country now set to be transformed. So it’s vital that agents keep one eye on this and work out a strategy for how they can benefit.
*Chris Hodgkinson is Managing Director of part exchange specialists HBB Solutions