Building Societies Association reacts to the Budget
Andrew Gall, Chief Economist at the Building Societies Association has commented on the Chancellor’s housing proposals.
Much of what the Chancellor said moved the housing debate in the right direction.
It is too soon to know whether the permanent abolition of Stamp Duty for first time buyers will have the desired effect and truly help cash constrained young people get on the housing ladder. Typically, these buyers will still have to save a deposit of between £15,000 and £30,000¹. The behavioural response of sellers could scupper the advantage if they simply increase the price of the property.
Our data shows that Stamp Duty is a much bigger barrier for home movers² than first time buyers. There was nothing specific in the Budget for them or indeed for older borrowers looking to downsize. Some are constrained by the lack of suitable homes. A lack of housing supply remains the single most important market issue we face.
Many of the proposals to boost the supply of housing will take a few years to get going and some are only at the consultation stage, but the allocation of up to £44 billion for housing infrastructure is a critical precursor to larger scale development.
The commitment to explore housing guarantees with a figure of £8bn mentioned was useful and could help smaller developers. We will contribute to this early stage work as it gets going.
The lifting of the Housing Revenue Account for local authorities should boost the building of much needed local authority housing. A healthy housing market that serves the needs of all in society must include social and private rented homes as well as home ownership.
Outside housing we very much welcome the increase of the Common Bond limit for credit unions from a geographic area of 2 million people to 3 million people.