Published: 09:00, 04 December 2017 |
Updated: 10:44, 04 December 2017
On his way to speak about the Autumn Budget on KMTV, Prof Richard Scase of Kent Business School stopped for a coffee on the Medway campus at the University of Kent.
He asked students what they thought about Chancellor Philip Hammond’s decision to abolish stamp duty for first-time buyers on properties worth up to £300,000.
The response was not what the government would have wanted.
He said: “Young people are very cynical about this. They said ‘what difference does it make when the price of a house is £275,000 to £300,000?’
"It’s a bit of PR and trying to catch the votes of young people and I’m not sure it’s going to succeed.”
The stamp-duty abolition was the flagship policy announced by Mr Hammond in his Autumn Budget, his second this year.
Yet developers in Kent believe it will have little impact unless the government addresses the real issue making housing unaffordable – the lack of supply.
Real estate investor Shahan Lall of Maidstone’s Lall Property Group said: “The crux of the problem is the amount of dwellings that are actually being built.
"Until there are changes to the fundamentals of the planning regime and we can get on site and build more houses, this will carry on.
“If you look at the Kent market, to buy at £250,000 you’re saving £2,500 in stamp duty. That’s a drop in the ocean compared to the total cost of buying a £250,000 house.”
The Chancellor announced a raft of measures to boost the housing sector, including £44bn in capital funding, loans and guarantees to help build 300,000 new homes a year by 2025.
He also ordered an urgent review into the gap between the number of planning permissions granted by councils and the number of houses being built.
Chaired by MP Oliver Letwin, the review is due to report by the spring statement next year, with the Chancellor threatening compulsory purchases of sites if there is evidence developers are sitting on land for commercial gains.
All developers that spoke to Kent Business denied the practice exists.
While they welcomed the measures announced in the Budget, they said the industry needed more skilled people and changes to planning policy to make it easier to build homes.
Mark Harrop, sales director for Bellway Kent, said: “Without a new generation of talent in the construction industry, the ambitious delivery targets would simply not be achievable.
“Bellway and other developers are working to attract people into the industry, and it is reassuring to see the government will invest in training and retraining people in construction skills.”
Mark Quinn, managing director of developer Quinn Estates in Canterbury, said: “The Chancellor is right to make house building his number one priority in the Budget but sadly this a real missed opportunity.
“The government need to do a lot more than just hold yet another review.
"As a company, we are extremely disappointed to see that the budget has failed to address the issue of greenbelt land yet again.
“The government needs to be courageous and build in places where people actually want to live, instead of focusing their efforts in some of the worst performing places in Kent.”
Matt Bath, an executive director at over-50s holiday and insurance business Saga, in Folkestone, said the company’s members thought the solution to the housing shortage was incentives for older people to downsize.
He said: “The stamp-duty holiday for first time buyers will be welcomed by Saga members who had called for this prior to the 2017 budget.
"However, without creating liquidity in the market this will simply exacerbate the already serious issues around supply and demand for first-time or starter homes.
“If the Prime Minister can bring in measures to enable people to ‘rightsize’ in retirement this would be a true inter-generational solution to the housing crisis and would deliver on the Prime Minister’s promise of helping young and old alike.
“Without helping those who are prevented from downsizing due to costs, this move will simply mean more people will be unable to get on the ladder, and those houses that do become available will command a higher price, potentially outweighing any stamp-duty savings made.”
Meanwhile, the government must help businesses improve productivity if the nation is going to tackle dire growth predictions set out in the Budget, bosses have said.
The Chancellor’s housing measures did little to mask a series of poor projections for the economy.
The Office for Budget Responsibility revised down its predictions for UK GDP growth compared to the Chancellor’s Spring Budget in March. The OBR said GDP would grow 1.5% this year compared with a prediction of 2% earlier this year.
Prof Richard Scase of Kent Business School in Canterbury said: “We’re a very low productive economy.
"You can only get an increase in GDP if your productivity increases.
"We have all these snarl-ups in terms of increasing the level of productivity like poor transport infrastructure, a shortage of skills and poor broadband even in places like Kent.”
Laurence Parry, a partner at Kreston Reeves, based in Chatham, welcomed the extension of the National Productivity Investment Fund for a further year and expanding it to over £31bn.
However, the addition of £7bn to the pot will only come in 2022/23.
Mr Parry said: “With concerns over our productivity rates high on the political agenda, and where we lag significantly behind our European colleagues, the extension of the National Productivity Investment Fund is interesting.
"Yet we will not see anything until 2022/23, which begs the question why? If it’s so important, it would make sense to have it earlier.”
Duncan Cochrane-Dyet, a partner at accountancy MacIntyre Hudson, in Canterbury and Maidstone, said the Chancellor’s measures to boost housebuilding were “a consequence of the fact we have dire economic predictions”.
He said: “This is the first time in modern history that for five straight years we’ve had forecasts below 2% growth. That’s quite a blow.
"It means the Chancellor has very little in his kitbag to give out in this Budget. The stamp duty is a bit of a giveaway but what’s given on one hand is taken back on the other.”
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