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London

Jones Lang LaSalle houseview on Shadow Chancellor’s announcement


Commenting on Shadow Chancellor, Ed Balls announcement earlier today, Jon Neale, director in Jones Lang LaSalle’s Residential Research team, said: “The Shadow Chancellor’s speech is commendable in its boldness, but this suggestion is not new. Many think tanks and other bodies – from all sides of the political spectrum – have argued that funding a step change in affordable housing provision would be an eminently sensible and practical thing to do. The supply chain for new housing is almost entirely domestic, as the bricks and fittings are almost all made in the UK. This means that any funding and any ‘multiplier effects’ are kept within the UK economy rather than leaking out through imports. Obviously, it would be more desirable to stimulate the industry privately, but with the mortgage market still highly constrained, and first-time buyers in difficult economic straits, that is unlikely to occur in the short term. Providing affordable housing would also have the beneficial effect of bringing down the housing benefit bill, which is a significant component of the deficit.

Jon Neale continued: "The more interesting question is what sort of affordable housing is provided. It’s clear that conventional social housing is no longer on the policy agenda, having been replaced by ‘affordable rent’. However, there is a discussion to be had around whether some new product could be devised, allowing individuals to rent now and buy later, or whether some form of private rented properties could be provided, along the lines suggested in the Montague Review published earlier this year.”

Jon Neale concluded: “The suggestion that first-time buyers be exempt from stamp duty is also welcome, although such steps have been taken before both by this government and the previous one. It would help many first-time buyers, struggling with large deposit requirements, to access the market. However, with average deposits standing at around £30,000 for a typical £150,000 property – with substantial further amounts required for legal fees – stamp duty of £1,500 is hardly the highest hurdle facing the would-be first homeowner.”