John Tutte, group Chief Executive at Redrow, comments on this week’s Budget and the implications for the housebuilding sector
“Following Theresa May’s Conservative Conference speech and this week’s Budget, housing is firmly at the forefront of Government policy. The Government recognises the scale of the challenge of delivering more homes and set out several proposals to boost both supply and demand. Their target to deliver 300,000 new homes a year by 2025 is certainly ambitious. The housebuilding industry is however already rising to the challenge – in the last four years the sector’s combined output has increased by 74%. However, the Chancellor also painted a gloomy picture for the UK’s macro-economic prospects as poor productivity and Brexit uncertainty impact GDP. It’s therefore important that investment in the housing market is maintained, not only to support first time buyers into home ownership, but to provide a much-needed boost to the wider economy.”
Stamp Duty Land Tax:
“Redrow has called for cuts to Stamp Duty for many years. Progressive increases since 2010 has added hugely to the cost of moving and reduces mobility across the housing market. The Government’s positive decision to immediately abolish Stamp Duty for most first-time buyers will enable more of them to bring home purchases forward and move out of the private rental sector. This will increase demand for new build homes, but also properties in the secondary market, enabling more families to move into housing that better fits their lifestyles.
“The Budget’s Stamp Duty changes are welcomed, however, I would have liked to have seen a more comprehensive review of the tax. A strategic review of Stamp Duty could see cuts to rates at the upper end of the market enabling homeowners to downsize, which in turn, would create more activity in the second-hand market. While there are political sensitivities to take into account when transforming Stamp Duty, sensible reforms are required to ensure that homeowners are able to live in properties that best meet their needs.”
Land Banking Review:
“While it is disappointing that the Government still need to be convinced the industry doesn’t hold unnecessarily long land banks, we welcome the review announced in the Budget. It is a chance for the industry to demonstrate once and for all that volume housebuilders are not responsible for hoarding land – indeed commercial fundamentals mean that housebuilders will want to realise the capital invested as quickly as possible. It is our hope that this review will reveal where the log jams in the system lie and that the Government will then take action, including making radical changes to the planning process.”
Help to Buy:
“The additional £10bn funding for Help to Buy announced at the Conservative Party Conference was an important signal to the housebuilding industry and recognition that the incentive has both increased output and helped many people to buy their first home. We now urgently need clarity on the future of the scheme beyond 2021. The Treasury is forecasting Help to Buy receipts of £1.5bn in 2022-23: this demonstrates that over time the scheme can be cost neutral. We will continue to argue for the extension of the policy and we hope the Government at the very latest, uses the next set piece announcement, the Spring Statement, to deliver clarity for the industry and aspirant homeowners alike. By doing so, the industry will have the confidence to invest in its future to help meet the Government’s target of 300,000 new homes”.
“The Government’s pledge to provide an extra £204m in support of skills training is very welcome and will help nurture new construction talent and support people from other fields into the industry through the funding for retraining. Housebuilders are already doing a significant amount to boost the sector’s skill base and this additional funding will help us go further. At Redrow, our specialist Learning and Development Team have helped us maintain our position as a Top 100 Apprentice Employer for the last four consecutive years and we continue to ensure that at least 15% of our workforce are trainees.
“Despite the good work already being done, the industry continues to face a growing skills gap which is further compounded by Brexit. The status of skilled EU born workers must urgently be clarified. Even with a strong pipeline of school leavers, the new T Levels and an increase in training budget, we will not see these new trainees coming through the system for a few years. A fifth of construction workers in the UK are from overseas and a clear majority of these come from within the EU – if we lose them, hitting the target of 300,000 new homes a year by 2025 will be virtually impossible”.
Redrow was established in 1974. Today, it is one of the most successful and acclaimed property developers in the UK, building around 5,000 premium quality family homes a year in prime locations across England and Wales. Over Redrow’s history spanning more than 40 years, it has earned a unique reputation for quality and building beautiful homes, which people love to live in. To help achieve this it also focusses on two other key areas: valuing people and creating outstanding locations. Implementing its strategy whilst engaging with colleagues and stakeholders helps Redrow deliver significant value to investors and the wider community. Redrow is listed on the London Stock Exchange and is a constituent of the FTSE 250 index. For the year ended 30th June 2016, the Group reported record revenues of £1.38 billion. Redrow has been awarded the ‘Best Large Housebuilder’ title twice in the last three years at the What House? Awards. This year, Redrow was named as a UK Top 100 Apprenticeship Employer for the fourth consecutive year. Visit redrow.co.uk for more details.