Commenting on the Budget, Simon Rubinsohn, RICS Chief Economist, said: “The range of measures announced under the ‘Help to Buy’ scheme to kick start the housing market are much needed. Helping those who can’t afford large deposits by using the Government’s balance sheet to guarantee mortgages and using capital savings to offer shared equity loans on new build for all buyers will help prevent prolonged market stagnation - although it presents a significant risk to Government. The devil will be in the detail about how the Government will treat buy-to-let and those in negative equity. RICS will monitor the impact on the market and prices. However, Government need to be careful this doesn’t create another housing bubble – pushing prices up at the expense of buyers.
“Once again, the Chancellor has reeled off the two infrastructure projects that Government has actually started – Hinkley Point and Battersea Power Station – and vaguely referenced others that are in the pipeline and will one day receive private investment through previously announced guarantee schemes and the much trailed Pension Infrastructure Platform. The £3bn a year announced by the Chancellor is welcome but will not come on stream until 2015-16 – far too late for many businesses that are struggling now. Our members have told us repeatedly that the success of infrastructure projects are about delivery on the ground. RICS believe Government should spend more time and resource in supporting business to gain access to these public sector projects.
“The Government has largely failed to realise that infrastructure projects don’t need to be big to be effective in creating growth. In fact small might very well be beautiful. Across the regions and the nations it’s the smaller repair, maintenance and upgrade projects which can be picked up by medium and small construction businesses. Rail maintenance and school refurbishment are just two areas where a small amount of capital investment would quickly deliver great benefits.
“The Chancellor says he is actively considering extending funding for FLS – RICS would urge him to act now. We are confident that an extension of the Funding for Lending Scheme (FLS) would assist more would-be homeowners and small businesses. While the FLS has been a key part of the beginning of improving conditions in the housing market, it’s hardly surprising that banks remain more willing to lend on residential mortgages rather than small businesses. Government needs to take a long hard look at the FLS as small businesses are the engine of the UK’s economic recovery.
“In all, a rather lacklustre statement from the Chancellor, which will do little deliver much for the economy in the near term. It’s time Government listened to what voters and businesses desperately need in order to make a real impact at a grass roots level.”