Autumn Statement Reaction from Wavensmere Homes
Reacting to Jeremy Hunt’s Autumn Statement, James Dickens, Managing Director of Birmingham-based housebuilder Wavensmere Homes, said: “Despite government debt continuing to rise, the Chancellor’s Autumn Statement signalled a change in direction, but there was too much flirting around the edges. We were hopeful of a reduction in Corporation Tax and are disappointed this hasn’t been implemented today.
“Following last month’s dramatic reduction in core inflation, we do welcome the Treasury’s reductions to National Insurance from 6th January and the 6.7% Universal Credit increase for those on the lowest incomes. Hopefully the overall focus on improving business productivity should see the OBR’s revised-down growth forecasts for 2024 and 2025 improve.
“As a Birmingham-based housebuilder, we also welcome the Investment Zone announcements for the West and East Midlands, which is where the majority of our live schemes are located. We look forward to seeing how the “mini Canary Wharfs” are to be delivered.
“Meanwhile, with mandatory housing targets in disarray, there is a significant reduction in the number of attainable homes coming onto the market. It was encouraging to hear the Chancellor commit to reform the planning system from next year to deliver faster ‘guaranteed’ timescales in return for higher application fees, which Wavensmere Homes and the industry at large supports.
“It was also a step forward to hear that the local housing allowance is being repegged back to market rents to help ease pressure on the demand for temporary accommodation, which is full of people unable to afford market rents. The unprecedented planning delays and additional costs facing housebuilders for environmental mitigation – which would be more appropriately directed at those using fertilisers – are negatively affecting the supply of lower cost new homes to address the issue. The £110m fund to tackle nutrient mitigation announced by the Chancellor today requires urgent implementation and the allocated fund must be increased to a more appropriate level.
“Now this key fiscal event has been delivered, it feels as if the market can still be relatively confident of a period of base rate stability. The Bank of England’s Monetary Policy Committee could even begin to drop the punishing rate of 5.25% by mid-2024, which could do the government a favour ahead of the date of the general election being declared.
“Despite the high interest rates, the chronic lack of new homes means it is no surprise that the prediction of a 10% fall in 2023 house prices is likely to level out at around 3%. Irrespective of the issues with mortgage affordability, house prices are already showing signs of increasing.
“It was disheartening to see the current Stamp Duty thresholds unchanged, as the only real help first time buyers currently have is the Stamp Duty exemption for homes valued up to £425,000. The Chancellor has extended the Mortgage Guarantee Scheme until June 2025, but it has had very little market traction. First time buyers deserve far more assistance than this to access the housing ladder due to massive deposit erosion exacerbating the already challenging situation.
“With less homes being built, there has been a marked impact on the rental market. For every home available to rent, there can be as many as seven people vying to occupy it. It is no surprise we have therefore seen rent hikes of 24% at our Belgrave Village scheme in central Birmingham, and similar increases of 22% at Nightingale Quarter in Derby city centre.
“Due to the difficulties vying first time buyers are encountering to obtain a mortgage, the sales rates of the PLC housebuilders – who have largely depended on them – have suffered. To counter this, there have been a number of sizeable deals into the Build To Rent sector. With the Renters Reform Bill seeing some private landlords sell up, I fear hardworking people could see pricy build to rent blocks as their only option. The current market conditions could result in three to four national landlords become an overly dominant oligopoly and able to collude to overinflate rents.
“We are frustrated with the lack of bold action from the Chancellor today and hope for a more confident Spring Budget.”
Wavensmere Homes is constructing three major urban regeneration schemes, located in central Birmingham, Derby city centre, and Ipswich, and has five further projects in the immediate pipeline. The Edgbaston-headquartered housebuilder has around 3,500 new homes either under construction or in planning.