A Plan for Jobs 2020 announced on 8th July 2020 by the government

Author: Kevin Leigh
In: Bulletin Published: Friday 10 July 2020


Half the UK’s wealth is in property of which around 20-25% is secured by lending. The planning sector like all parts of the economy suffered during lockdown. Even though the construction industry was one of the few allowed to hobble along during lockdown, the sale of houses came to a complete halt. As the economy restarts, there are huge financial considerations for the property and planning world.

There was already a housing crisis before CV19 with woefully insufficient new housing being built to meet demand. The supply of land is a matter of planning policy and the government is now specifically reforming it to release more land for housing in areas where it is needed including relaxing controls for permitted development rights to convert buildings into housing (among other uses). Nonetheless, the ability to buy or rent has been affected by reduced incomes and savings to fund deposits and purchase generally while public confidence for households to spend large capital sums has been dented. Lenders are worried too about house prices falling in the medium to longer term. With lending already strictly controlled, levels of minimum deposits required by lenders have increased to build in a cushion for them in the event that prices move downwards (thereby reducing the equity for those with mortgages).

The government previously sought to increase housing stock by discouraging buy-to-let owners and second homes. The former was done by removing the tax benefit of setting off interest on mortgages. The latter was done by raising stamp duty across the bands. With a dramatic increase in renting by the under 35s and landlords trying to offload housing stock, the discouragement of buy-to-let owners has backfired. However, since the market still needs purchasers able to buy, the disincentive of much higher stamp duty also reduced revenue to the government and slowed down sales. The stamp duty holiday starting immediately for house purchases (a nil rate band of Stamp Duty Land Tax up to £500K) it is hoped buyers will be encouraged in this sector. The continued economic aid directly and indirectly to workers should also help the ability to fund deposits and justify incomes suitable for mortgages. There is also a specific Construction Talent Retention Scheme designed to redeploy workers in the construction industry instead of making them redundant. The proposed changes in VAT in the hospitality sector will help leave more money in the consumer pocket. Together the government hopes that these will boost the economy through increased house sales equivalent to 5% of the value of house sales.

An Affordable Homes Program has also been announced to spend over £12 billion over 5 years to deliver up to 180,000 new affordable homes by the end of the decade.

Small and medium size housebuilders unable to access private finance will be able to use instead the Short-Term Home Building Fund. This is expected to provide up to £450 million of development finance to build over 7,000 new homes. Some £400 million of Brownfield Housing Fund will be given to 7 Mayoral Combined Authorities to unlock a further 24,000 homes.  

In addition, the government is accelerating almost £9 billion of capital spending into the construction industry on a wide variety of infrastructure projects including the health service, schools, court modernisation and the probation service, prisons, roads and railways. A taskforce known as ‘Project Speed’ has also been created to build faster. As part of its green agenda, the government is going to invest over £1 billion over the next year in a Public Sector Decarbonisation Scheme through grants to the public sector to fund energy and low carbon hear upgrades. There are several others green schemes proposed to improve the environment while creating or preserving jobs.

The net effect is that the government is stimulating both the demand for housing by helping buyers while at the same time promoting the delivery of housing and creating construction work through multiple funding packages. If the promised policy changes also are as radical as the economic aid then the planning – and therefore construction – worlds are going to take off.




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The full government announcement can be found here: A Plan for Jobs 2020 - Gov.UK