Labour announced billions in additional funding for social and affordable housing, while also promising to cut red tape to accelerate construction.
The Spring Statement is historically the first of two annual updates on the state of the UK economy.
However, Chancellor Rachel Reeves has identified the Autumn Budget as the only major financial event each year.
While the announcement on March 26 produced fewer headlines than its October counterpart, it still included some intriguing updates for the private rented sector (PRS).
In this blog, we'll explain what they were and analyse their potential impact 👇
Spring Statement: 6 key takeaways for the PRS
Solving the housing crisis is one of the Government's key manifesto pledges. Here's what happened in the announcement:
- Reeves spoke about "getting Britain building again", promising changes to the National Planning Policy Framework which was "too slow" under the Conservatives
- She noted that the Office for Budget Responsibility (OBR) has concluded Labour's reforms will take housebuilding to a 40-year high
- Building 305,000 homes per year by 2029/30 will help deliver over 1.3 million homes in the UK over the next five years, bringing the Government within touching distance of its 1.5 million target
- Reeves officially announced that the Government will provide an additional £2 billion for social and affordable homes next year, which will deliver up to 18,000 new homes
- She also acknowledged that "to build these homes, we need people with the right skills", which is why Education Secretary, Bridget Phillipson, has announced £600 million to train up 60,000 more construction workers
- Finally, Reeves also mentioned how recently announced Planning and Infrastructure Bill will help to cut red tape, speed up the planning process, and help the Government deliver its housing pledges when it becomes effective
Goodlord's analysis of the Spring Statement
In response to the Chancellor's announcement, Goodlord CEO, William Reeve, said:
“The PRS is creaking under intense pressure. A lot of this is attributable to supply and demand; there simply aren’t enough homes to go around.
"Today’s announcement that £2 billion will be directed towards social house building is welcome, but the planned 18,000 homes barely touches the sides of what’s needed."
“We’re going too slowly to hit the Government’s target of 1.5m new homes this parliament, which in itself won’t be enough to close the UK’s housing gap. And we are falling behind our neighbours - the numbers are stark when you compare our housing stock with countries like France. This is being compounded by anti-market reforms.
"Despite the Government’s narrative about promoting growth and stripping away red tape, where housing is concerned it is doing the opposite. It is inhibiting the market from finding solutions that would reduce the amount of money the Government needs to pour into the sector."
"For example, we should scrap provisions in the Renters' Rights Bill that will suffocate market dynamics, such as bans on ‘over-bidding’ and abolishing fixed term student tenancies. Both reforms are anti-market and will actually make things harder for tenants, not easier.
"Likewise, we should remove the artificial barriers between the social and private sectors, introducing more fluid, means-tested pathways between the two sectors and targeting support more effectively. And we should be pushing even harder to drive through planning reform and make investing in property a more attractive option."
Conclusion
During her address, the Chancellor added several caveats about the uncertainty of the global economy, while announcing a long-term commitment to increased defence spending.
However, future cuts to welfare are what the PRS needs to look out for. These will likely put more pressure on tenants' affordability and increase the likelihood of rent arrears and evictions.
