Following the Prime Minister's announcement of the intention to scrap the Housing
Revenue Account (HRA) borrowing Cap, the Chancellor's 2018
Budget confirmed the removal of HRA borrowing caps for local
authorities in England and Wales.
The removal of HRA borrowing caps became effective from 29
October 2018 in England.
Cost estimates provided in support of the Budget, project the
additional local authority capital expenditure financed by new
borrowing as a result of the lifting of the borrowing caps over the
period to 2023/24 to be as follows:
|
2018/19
|
2019/20
|
2020/21
|
2021/22
|
2022/23
|
2023/24
|
|
£95m
|
£385m
|
£850m
|
£855m
|
£1235m
|
£1235m
|
These costings assume that the base includes the impact of the
£1billion uplift in borrowing caps announced
in the Autumn Budget 2017 ( that borrowing was to begin in 2019/20
but the bidding process for it has been superseded by this policy
announcement).
Among other housing measures announced in the Budget, the
Government confirmed allocation of resources for housing,
including:
- £291 million from the Housing Infrastructure Fund to unlock
18,000 new homes in East London through improvements to the
Docklands Light Railway
- A new scheme providing guarantees to support up to £1 billion
of lending to small and medium housebuilders
- £653 million for strategic partnerships with nine housing
associations to deliver over 13,000 homes
- £75 million from the Home Building Fund for St Modwen PLC to
fund infrastructure to build over 13,000 new homes
- A new five year strategic business plan for Homes
England.
Alongside the Budget, Sir Oliver Letwin published his independent review into build out rates,
examining the gap between housing completions and the amount of
land allocated or granted planning permission. The review found no
evidence that speculative land banking is part of the business
model for major housebuilders. The Government will respond to the
review in full in February 2019.
An announcement was also made in the Budget that the Government
has launched a consultation on new permitted development rights, to
allow upward extensions above commercial premises and residential
properties, including blocks of flats and to also allow commercial
buildings to be demolished and replaced with housing.
A further announcement was made that the Government will make
£10 million capacity funding available to support Strategic Housing
Deals in areas of high housing demand.
By March 2021, the Government expects to have invested around
£22billion in the current Help to Buy Scheme. The Budget
contained an announcement that a new Help to Buy Equity Loan Scheme
will run for 2 years from April 2021. Unlike the existing Scheme,
the new Scheme will be available for first time buyers only and for
houses with a market value up to new regional property price caps
set at 1.5 times the current forecast regional average first-time
buyer price. The caps range from £186,100 in the North East to
£600,000 in London.
On the back of concerns regarding the impact of welfare reforms
and further expansion of the introduction of Universal Credit, the
Budget also included a number of changes to Universal Credit
including:
- A fixed cash increase of £1,000 to Universal Credit work
allowances (the amount that can be earned before the Universal
Credit taper rate applies) effective from April 2019
- Extra help in the amount of £1bn over the current and next 5
years for households moving onto Universal Credit
- A revised implementation schedule for "managed migration" of
existing claimants to Universal Credit which will start in January
2020 and will end in June 2024.
Full details of the Budget 2018 can be found on the HM Treasury website.