Chancellor Jeremy Hunt has set out plans to unlock the building of more homes, including through tackling a planning backlog, but the reaction from shareholders in FTSE 100 residential businesses looked lacklustre on Wednesday afternoon.
Among measures in the Autumn statement to boost housing supply is the government investing an additional £32 million across housing and planning, including funding to tackle planning backlogs in Local Planning Authorities. That is alongside further reforms to streamline the system through a new Permitted Development Right to enable one house to be converted into two homes.
The government added that it is providing £110 million of funding to support Local Planning Authorities to deliver high quality schemes to offset nutrient pollution, unlocking planning permissions that are otherwise stalled.
Housebuilders have cut back on construction targets during a turbulent time since the controversial mini-Budget in Autumn 2022.
The industry has been grappling with various challenges from soaring mortgage costs hitting buyer demand, to the Help to Buy scheme closing to new applicants in October last year making affordability out of reach for numerous first time purchasers.
A report in September said the planning pipeline for new London homes is at its quietest since 2010, with soaring costs, interest rates and red tape all suppressing housebuilding activity.
Following the Autumn statement investors did not pile into FTSE 100 housebuilders, and as at 3.40pm shares in Barratt and Taylor Wimpey were respectively down 0.14% and 0.94%, while Berkeley edged up 0.2%.
Jennet Siebrits, head of research at CBRE UK said: "While it is encouraging to see the chancellor commit to reviewing the planning system to speed up the time for major applications, it is not clear how major applications will be defined and how much residential development will be covered by the definition.”
James Owens, planning partner at property consultancy Rapleys said: "The announcement by Jeremy Hunt that he will allow local authorities to recover the full costs of major planning applications, in return for being able to meet guaranteed faster timescales, with those fees being refunded automatically, if the authorities fail, will be broadly welcomed by the development industry. The Chancellor's idea of a "prompt service or your money back" is eye-catching and one that will be welcomed in principle. However, until the increased funding feeds through to better resources, there is unlikely to be much change in reality."
Jonathan Samuels, CEO of lender Octane Capital said the update "was a missed opportunity to help kick start a property market that has been looking a tad lethargic of late".
Samuels added: "Higher mortgage rates and wider market uncertainty have caused the market to cool as a result of a drop in buyer activity and we were hoping that the government would offer up an incentive to entice them back into the fold.”
