Pre-budget report – Housing sector to feel the pinch

This article is provided courtesy of the news feed at http://www.newstartmag.co.uk/news

The housing sector will continue to be ‘squeezed’ in the fight for a share of public spending over the next few years.

The Chartered Institute of Housing (CIH) said today’s pre-budget report gave ‘the clearest indication yet’ that housing will feel the impact of public sector cuts, stating that ‘health, education and policing appear to be the only areas of government policy with guarantees of public expenditure growth’.

The housing sector could take some ‘crumbs of comfort’ from the decision to maintain high levels of public borrowing through to the end of 2011 to safeguard public services and support the economy, said the CIH.

This will, in turn, see the government honouring its pledge to build 112,000 affordable homes over two years as well as extend, by six months, the Support for mortgage interest scheme which helps homeowners who have experienced a fall in income to remain in their homes.

Plans to improve home heating and insulation were welcomed by the CIH, which also said rent reductions for local authority tenants would help millions of people.

But concerns were raised by the CIH over the stamp duty holiday, which has helped 240,000 new homeowners, finishing at the end of the year.

Sarah Webb, CIH chief executive, said: ‘There are some helpful measures announced today and we should recognise Government efforts and success to stabilise the housing market.’

But issues such as ‘the creation of a more stable and sustainable housing market, which is less reliant on the boom and bust of house price inflation’ could be at risk, she added.

Andrew Pratt, managing director of residential at Grainger Plc, described the pre budget report as ‘on the whole disappointing for the residential property industry’.

‘While the end of the stamp duty holiday was not unexpected, broader reforms to this tax will be necessary to encourage institutional investment, including the disaggregation of stamp duty land tax,’ he said. ‘Other practical measures will also be necessary such as the direct payment of Local Housing Allowance to landlords.’