The Budget 2020: What It Means For The Housing Market
Today, 11th March 2020, Rishi Sunak has announced his first budget, which he hopes will help to kick start the UK economy, following the uncertainty surrounding Brexit and coronavirus.
Following on from the announcement from the Bank of England that they have cut the base rate of interest to 0.25%, high street lenders offering mortgage and loan repayment holidays for those affect by coronavirus.
Mr Sunak has listed the provision of affordable and safe housing as a priority.
“Today I can make good our promise to extend the Affordable Home Programme with a new, multi-year settlement of £12bn.
“To support local authorities to invest in their communities, I’m cutting interest rates on lending for social housing by one percentage point.”
Mr Sunak says that will make more than £1bn of discounted loans available for local infrastructure.
“I’m confirming nearly £1.1bn of allocations from the Housing Infrastructure Fund to build nearly 70,000 new homes in high demand areas across the country.”
The Chancellor then went on to describe that this has been the largest cash investment in affordable housing in a decade, which coincides when the Conservative Government came into power.
Mr Sunak also introduced a 2% stamp duty surcharge for non-UK residents.
Nick Leeming, Chairman of Jackson-Stops, comments on today’s Budget:
“Today’s Budget is in many ways somewhat of an ‘emergency budget’ to mitigate the economic impact caused by Covid-19. As a result, it is not business as normal in Number 11 and we welcome the range of measures announced to help support businesses in these more uncertain economic times and Government’s commitment to providing a £30 billion stimulus to support the economy through Coronavirus.
“It is disappointing that the Government has failed to provide the housing market with a long anticipated reform to stamp duty for UK residents. This is aggravated by the overseas buyer tax, which could now see foreign purchasers pay up to 17% in stamp duty from 2021. Reducing the burden of stamp duty across the board would have provided the market with further momentum following the Boris bounce. Despite this, the higher end of the market may now see movement as foreign buyers look to secure deals ahead of this deadline.
“The Government has teased the industry and home buyers alike with hopes of a future reform to stamp duty, but we don’t expect this to put the brakes on people’s current home buying decisions – particularly now borrowing costs are back down to the lowest level in history following the Bank of England’s cut to interest rates. Since Boris and the Conservative party won the General Election, our branches registered, on average, a 10% increase in new applicants on the year to January, with new instructions in the month also up by 26% compared to January 2019 figures. Despite this, there are some pockets of the market that just aren’t budging. A targeted relief for homeowners who live in properties that are larger than their needs would help encourage these owners to downsize and free up these homes for families to provide further fluidity in the market. We’ll now be eagerly awaiting the Autumn Statement to see if stamp duty gets the attention it deserves.”
Richard Silva, Executive Director of Long Harbour said:
“We are delighted that the Chancellor has listened to the calls from residents and building owners and has expanded the cladding remediation fund, whilst recognising that neither leaseholders nor building owners should have to bear the cost of regulatory failure in the construction industry. Freeholders and managing agents have been working hard to fix these buildings as quickly as possible but central funding is essential for the acceleration of this process. We look forward to working with Government to make these buildings safe as quickly as possible.”
James Tucker, CEO of technology provider Twenty7Tec, on today’s Budget:
“The retention of a level of Entrepreneurs Relief is a welcome change to the expected abolition of this benefit. At this time in the economic growth cycle, and with the global economy inevitably facing a slow down, any mechanisms which incentivise entrepreneurs to strive to grow their businesses should be encouraged.
Further, the increase in the R&D tax credit relief to 13% further exemplifies a Government that is committed to supporting businesses deliver new and innovative solutions to market, as we have done consistently for the last 5 years.”
Mark Hayward, Chief Executive, NAEA Propertymark comments on the Government’s announcement in today’s Spring Budget to introduce a 2% stamp duty surcharge for non-UK residents:
“If introduced, this policy allows those in the UK to have a better chance at purchasing a home. However, overseas buyers tend to purchase properties in prime central London which are completely unaffordable to most homebuyers anyway. Therefore, this move will not help those that need it most. Ultimately, by energising surcharges, it is likely that purchasers will factor this additional cost into any offers they make on a property so prices may be pushed down in areas where overseas buyers are purchasing.”
Lee Pickett, a real estate partner at global legal business DWF, said:
“Once again the Government has indicated a willingness to invest heavily in housing and the infrastructure require to unlock housing development. It is also backing local authorities and RPs to deliver the majority of affordable housing . No doubt those organisations will continue to work closely with Homes England to make further inroads into meeting the challenges laid down in the Housing White Paper.”
John Phillips, National Operations director at Just Mortgages said:
“A surcharge for foreign buyers of residential property is something I have argued in favour of for a long time, so it would be churlish for me to criticise it. But what is needed alongside that is a reduction in Stamp Duty elsewhere.
“As the Institute for Fiscal Studies has said, Stamp Duty is a tax on transactions, pure and simple, which freezes up the market and means people don’t get to live in homes that meet their needs.
“This Budget is being delivered in unexpected and extraordinary circumstances so it is understandable that the Chancellor may not see this is a priority. I hope that he will revisit the issue once Covid-19 is under control, in line with the promises previously made by the Prime Minister.”
Other highlights of the budget include:
- Fuel duty frozen for another year
- £5bn for gigabit-capable broadband into the hardest to reach places of the UK
- £7bn to support the self-employed businesses and vulnerable people
- Business rates abolished for small shops for this year
- £6bn funding promised to the NHS
He went on to say:
“The Office for Budget Responsibility (OBR) have said that today’s Budget will be the largest sustained fiscal boost for 30 years.
“Next year, day-to-day departmental spending will grow at the fastest rate in 15 years.
“Over the spending review period, its set to grow at the fastest rate since 2004. An average growth rate in real terms of 2.8% – twice as fast as the economy.
“That means that by the end of the Parliament, day-to-day spending on public services will be £100bn higher in cash terms than it is today.”