As is often the case, however, the announcement was high in rhetoric and gags (there were lots of jokes), but short on detail.
The headline message on stamp duty was positively received, but is unlikely to drive a surge in transactions. The Office for Budget Responsibility commented that the move would push prices up by 0.3%.
Interestingly, this measure couldn’t prevent a fall in the share price of housebuilders Berkeley Group and Barratt Developments following the announcement of an “urgent review” to look at the gap between planning permissions and homes built. And it is this review – the results of which are due ahead of the Spring Statement – that may ultimately have the biggest impact on small developers.
- Are other regions becoming more attractive than London for property investment?
- A dose of realism
- Castle Trust doubles maximum development loan size
If the review finds that big builders have been controlling the supply of homes to maximise their profit margins, the government will need to take action, and this is likely to have a knock-on effect on smaller developers. The nature of the action will determine whether this effect is positive or negative.
If, for example, the government orders larger housebuilders to carve up sites that they are unable to immediately build on in order to make them available for smaller developers, then this could present new opportunities and potentially lower land prices. However, if housebuilders are instead given a deadline to build on those sites or face financial penalties, then this could soak up resource and make it harder for smaller players to compete for the skills they need.
In general, however, while detail is in short supply, the direction of travel is a positive one for developers. There is a commitment to build 300,000 homes a year by 2020, regenerate urban areas with new housing and create five new garden towns. This is no small task and it presents a huge opportunity for those developers who are able to contribute to making it a reality.