Autumn Statement 2016: A boost for Housing and Technology
For the housing market, and for new technology firms, the announcements in Philip Hammond’s Autumn Statement are resoundingly positive. A clear focus on increasing productivity through investment in housing, infrastructure, and disruptive technologies shows that the government has recognised the greatest growth opportunities for our economy. Here is a breakdown of the facts most pertinent to investors with Property Partner:
Spend on housing to double
The treasury has committed to more than double annual capital spending on housing. The previously announced £3bn Home Building Fund, and additional £2bn ‘accelerated construction’ fund (covered in our blog, here) were referred to, but as the chancellor said – “we must go further.”
• Improving housing infrastructure
New investment opportunities will arise as value is unlocked in new parts of the country. Hammond announced a £2.3bn local infrastructure fund “to unlock land for housing” and to “deliver infrastructure for up to 100,000 new homes in areas of high demand.” This boost to infrastructure will reduce the burden on current hotspots, with improved transport links allowing increased mobility and quality of life for workers.
• Support for affordable housing
Hammond announced an additional £1.4bn to deliver 40,000 affordable homes by 2020/21, across a ‘wider range of housing’. This shows a sage commitment to service rental accommodation as well as homeownership. Providing higher quality, affordable rental stock is essential as more people rely on long-term renting. London will also receive £3.15 billion as its share of national affordable housing funding to deliver over 90,000 much needed homes in the capital.
Infrastructure and innovation: A priority
Perhaps the most significant announcement from the statement was the introduction of a new National Productivity Investment Fund of £23bn aimed at “infrastructure and innovation”.
The planned investment in infrastructure will unlock growth in many new areas of the country and will help reduce regional inequality. The Chancellor announced additional plans to support growth in key regional areas such as the ‘Northern Powerhouse’ and ‘Midlands Engine’, as well as London and the South East. Property Partner recognises the opportunities presented by the North and Midlands, and has already made an active effort to increase our exposure in these areas, while continuing to pursue opportunities in London and the South East. This has given our investors the ability to achieve a regionally balanced portfolio.
Within the ‘innovation’ category, Hammond cited science and technology in particular. Firms like Property Partner are to be given preferential support for the value that they bring to the UK economy in terms of improving services, and boosting economic growth. £400m will be injected into Venture Capital enterprises through the British Business Bank, unlocking £1 billion of new finance to help new technology firms grow. This support will increase innovation, help economic growth and continue to attract international talent.
Fairer for tenants: The ban on letting agent fees
The Chancellor has announced a ban on the fees that many tenants are charged by letting agents. At Property Partner, we welcome changes that increase fairness for tenants. We only hire agents who charge fair fees, so any impact will be extremely minimal and can be factored into negotiations with agents. Dividends for our investors will not be impacted, and we will not be charging our tenants higher rent as a result of this change.
More importantly, the government’s commitment to increasing housing supply will take away the unfair advantages that some letting agents have chosen to exploit.
A positive step forward
We welcome the government’s decision to address some of the greatest challenges faced by our economy today, and to embrace some of the greatest opportunities. Their support for housing and innovation is well placed, and we look to the future with confidence.