LEVVEL EBRIEFING - PRE BUDGET REPORT 10 December 2009

Dear all   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 [1], 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 [2]. Despite these concerns the Government remains committed to the Zero Carbon Homes strategy as well as implementing a Lifetime Home standard [3]. Lets hope we see the “proportionate approach” the Report suggests! [4] 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 [5], 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 [1] Paragraph 5.56 Pre Budget Report [2] Paragraph A67 Pre Budget Report [3] To be delayed until 2013 [4] Box 5.2 page 92 Pre Budget Report [5] Box 5.2 Stuart Woodward Managing Director for and on behalf of Levvel Ltd Leigh House, 147 Leigh Road, Wimborne, Dorset, BH21 2AD Tel: 01202 639 444 Fax: 01202 881 868 News updates have just been put on our website www.levvel.co.uk The information contained in this e-mail and any attachments is confidential. It is intended solely for the use of the individual or organisation to whom it is addressed and others authorised to receive it. If you are not the intended recipient of this e-mail please notify the sender immediately and delete it from your inbox. You are advised that to use, disclose, distribute, copy, print or rely upon its content in any way is prohibited and may be unlawful. All reasonable steps have been taken to ensure that this e-mail and any attachments are free from computer viruses. Levvel accepts no liability in respect of any loss, cost, damage or expense suffered as a result of accessing this message or any of its attachments. Unsubscribe from future Levvel emails If this email is unreadable please view on our website