|LEVVEL EBRIEFING - PRE BUDGET REPORT
10 December 2009
We have just been through the Chancellor’s Pre Budget Report to see if there is any encouragement for the house-building industry for next year and beyond. Well, there are no ground breaking ideas, as you might expect with the limitations on private and public finances, but housing supply is recognised within the Report as being an essential ingredient to improving the UK’s economy. For existing home owners the government will continue to put pressure on banks to ensure people are protected as best as possible from repossession and for renters it will encourage councils to reduce the increases of affordable rents.
However, there appears nothing new for encouraging the sale of new homes. Indeed, the stamp duty holiday for properties up to £175,000 comes to an end on 31st December 2009 , increasing costs particularly for first time buyers. However, the government had sought commitments from banks to increase lending to business and we hope this translates to better lending terms for house builders and developers – time will tell. In the meantime the Chancellor recognises that continued lending restrictions to households, coupled with concerns over household income and increased supply as the market recovers, suggests that it is unlikely we will have significant increases in property values for some time .
Despite these concerns the Government remains committed to the Zero Carbon Homes strategy as well as implementing a Lifetime Home standard . Lets hope we see the “proportionate approach” the Report suggests! 
In this uncertain environment, the government appears to be placing considerable hope on the private sector financing £200billion infrastructure over the next 10 years, expecting developers, through PFI/PPP and the introduction of the Community Infrastructure Levy in April 2010, to fund not only internal infrastructure but also to make contributions to external strategic infrastructure. There is an anticipation that Councils will positively identify and prove the viability of developments in a five year land supply – i.e. land value capture will have be used to identify any excess land value increase to be spent on infrastructure and affordable housing. We believe that these expectations are wholly unrealisable, given the struggle that developers will have in just achieving planning gain and some affordable housing. The attached paper suggests likely future scenarios as to possible affordable housing targets and what may be viable over the next few years – the bottom line is without public subsidy the affordable housing needed is unlikely to be provided.
Fortunately there is an acknowledgement in the Report that Councils should apply policy in a flexible way , through the use of viability assessment, and recognises that planning gain contributions might need to be scaled back to ensure that developments remain viable.
2010 is going to be an interesting year!
Read Full Pre Budget Report - Visit HM Treasury website
Read Levvel's Pre Budget Briefing - 60k PDF
 Paragraph 5.56 Pre Budget Report
 Paragraph A67 Pre Budget Report
 To be delayed until 2013
 Box 5.2 page 92 Pre Budget Report
 Box 5.2
for and on behalf of Levvel Ltd
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