Half of local authorities will miss housing targets, says NAO report

Half of England’s local authorities won’t build enough homes to meet the “housing delivery test” set by the National Audit Office (NAO) for 2020, in a report published recently by the government watchdog which criticises the current planning system and the DCLG. In the document, ‘Planning for new

homes,’ the NAO critiques the planning system, alongside local councils’ lack of action in meeting Government targets. It states that the reductions in local authority capability, an under-performing Planning Inspectorate, alongside failures in the system to ensure adequate contributions for infrastructure, all mean that “it is clear that the system is not working well.” “Given these problems,” the report says,

“We cannot conclude that the planning system currently provides value for money in terms of delivering new homes effectively.” The independent audit body has claimed

that, as of December 2018, 44.1 per cent of authorities had an up-to-date local plan (less

than five years old), that sets out their strate- gies for reaching the targets. Until November 2018, the DCLG had only challenged 15 local authorities on this issue. The NAO believes that without new plans, local author- ities will have less control over the location of developments, and that this lack of control risks “ill-suited” developments. The report revealed that total spending

by local authorities on planning functions fell 14.6 per cent in real terms between

2010-11 and 2017-18, with local authori- ties increasing their income to avoid further reductions. The report also criticises the Planning Inspectorate for being slow to determine appeals, although the agency has itself acknowledged that its performance is unacceptable. On average, The Inspectorate is believed to take 38 weeks to determine an informal hearing or inquiry- based housing appeal.

Tax and Brexit blamed for ‘parlous’ state of market

The combination of successive tax hikes on residential property and uncertainty around Brexit “looms heavily” over the UK, according to London Central Portfolio’s (LCP) analysis of recent HMRC’s Stamp Duty Land Tax (SDLT) statistics. The analysis has revealed that tax receipts for 2018 in England, Wales and Northern Ireland are down 8.5 per cent on 2017, and amount to £8.669bn, a loss of revenue of £802m. Along with this, transactions have fallen by 2.6 per cent in 2018, and now stand at just over one million. This compares with HM Land Registry data for 2018, which reports a 4 per cent fall. On a more granular level, HRAD transactions (those which include the 3 per cent additional duty) have been the hardest hit, with a fall of 4.6 per cent). First Time Buyers’ Relief, an initiative introduced to help many struggling to get on the housing ladder, amounted to £517m in 2018. This represents a saving for the average purchaser of £2,374 “at a crucial

time when they are saving for their first deposit,” said LCP. However, take up reportedly appears to be plateauing, with 60,700 transactions claiming FTBR in Q4 2018, compared with 59,000 in Q3; a rise of just 2.9 per cent. LCP stated that, with the housing market in such a “parlous” state, “it can only be hoped that Chancellor Philip Hammond will not implement an additional levy of 1 per cent on non- residential purchasers, proposed in the last Budget.” The company believes that this would be “particularly imprudent” in light of the UK’s need to build on global invest- ment as it exits the EU.

Foreign investors were revealed to make up a significant proportion of buyers in LCP’s report, particularly in new build developments. With developers “currently struggling and scaling back projects,” LCP believed this new tax would not be welcome, as the higher end stock enables developers to build out much needed affordable housing. It also sees a material

impact on tax revenues as unlikely, given the recent trend of falling receipts, along- side steadily rising tax rates. Naomi Heaton, CEO of LCP, commented: “HMRC’s 2018 stamp duty statistics do not paint a rosy picture of the UK housing market, with neither the buyer nor the Exchequer winning out. Until the Government has a clear road map for Brexit, we are unlikely to see increased transactions, and therefore increased revenues.”


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