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By Bethan Evans, partner and banking and finance specialist, Clarke Willmott LLP.
During the Summer Economic Statement, Chancellor Rishi Sunak announced £1bn of funding to improve the energy efficiency of public-sector buildings and a £50m fund to pilot the decarbonisation of social housing through interventions such as insulation and heat pumps.
This is a welcome announcement in many ways for housing associations, tenants and the wider industry. Energy efficiency improvements have been on housing associations’ agendas for some time now, and a subsidy from the government to support this will almost certainly be appreciated.
The funding will also provide a boost for local, regional and national economies through trades and supply chains during a time of economic uncertainty. Lower energy bills for tenants should also mean more money in people’s pockets, which will have indirect economic benefits.
Also announced during the statement was a £2bn Green Homes Grant which will allow homeowners and landlords to apply for vouchers to spend on making their homes more energy efficient. The funding is likely to cover retrofitting insulation, double or triple glazing and modern heating systems in existing stock.
The grants will cover at least two thirds of the cost, up to £5,000 per household – and for low-income households the full cost up to £10,000.
The Chancellor claimed measures would see up to 650,000 homes retrofitted, create 140,000 green jobs and save households up to £300 per year on energy bills.
While again this is a welcome announcement, it is yet to be confirmed if the programme is open to both social and private landlords and the Government is yet to define ‘low-income’.
Further support aimed at the housing sector includes increasing the Stamp Duty Land Tax threshold in England and Northern Ireland to £500,000.
Whilst this could be an attractive benefit for potential purchasers, saving them up to £4,500, it is yet to be seen whether the impact will have the desired effect of reviving the flagging housing market, when conditions such as rising unemployment and the availability of mortgage funding are likely to be more decisive factors.
The property sales tax system in Wales is a devolved power. Having replaced Stamp Duty Land Tax in 2018, Welsh homebuyers will see the starting threshold increase for the Welsh Government’s Land Transaction Tax rise from £180,000 to £250,000 from 27 July.
To further support jobs and house building in Wales, the Welsh Government also announced the allocation of £30m to the Social Housing Programme to provide additional support to boost construction within the Welsh social housing sector.
It is likely that planning applications for new developments will need to focus on the availability of more affordable housing during these economically uncertain times.
There is a clear opportunity here to emphasise the importance of carbon savings – both during the development phase and for new housing when it is up and running, bringing sustainable housing and development into the mainstream rather than viewing it as being different from the norm.
In Summer 2020, the government will launch a policy paper setting out its plan for comprehensive reforms of England’s planning system to better support the economy and release more land for housing in areas that need it most.
These measures are a positive first step towards helping the country meet its net-zero carbon goals, but will they be enough to keep the housing market on track?
The industry will look forward to hearing more details on the plans which are to be announced nearer the launch of the schemes and the impact they will have locally, as well as their sustainability credentials.