Yesterday afternoon saw the Chancellor Rishi Sunak deliver his Budget speech in a crowded House of Commons, where he announced a range of measures to pave the way for a post-Covid ‘age of optimism’.
These include reformed business rates to make the system fairer and timelier, as well as billions of pounds of funding for the NHS and wage rises for millions of workers.
While these pledges were more generous than many anticipated, there was little mention of property. The high-profile issues of stamp duty and Inheritance Tax were not mentioned at all.
Meanwhile, there was one minor change to Capital Gains Tax post-Budget, with the deadline for filing a tax return being doubled from 30 days to 60 days, which came into effect this morning.
However, there were still enough key policies of note to make the industry sit up and take note. Here at Kings Group, we break these down below…
Cladding scandal tax levied on developers
In his speech, Sunak confirmed already-announced plans to spend £5 billion on remediating buildings with dangerous cladding.
Part of this will be funded by a new Residential Property Tax placed on developers with profits of more than £25 million at a rate of 4%, which was first announced in February.
The announcement is welcome news to the industry. However, questions have been raised as to whether this will truly help leaseholders trapped in dangerous flats.
The fund is also considerably less than the Department for Levelling Up, Housing and Communities – formerly the Ministry for Housing, Communities and Local Government – estimated it could cost to remove all dangerous cladding earlier this year.
£1.8 billion fund to build new homes
The Chancellor also announced £1.8 billion funding to turn brownfield sites into new homes, in a scheme that sounds similar to the recently cancelled Starter Homes Initiative.
As part of the government’s oft-discussed levelling up agenda, there will be up to 180,000 affordable homes built on brownfield sites as part of a ‘multi-year housing settlement’ of almost £24 billion. According to Sunak, this counts as the largest cash boost in a decade.
“We are investing more in housing and homeownership with a multi-year settlement totalling nearly £24 billion,” Sunak told the Commons.
“The government will provide £11.5 billion to build up to the 180,000 new, affordable homes the country needs annually, 20% larger than the previous programme.”
“We are investing an extra £1.8 billion, enough to bring 1,500 hectares of brownfield land into use, meet our commitment to invest £10 billion in new housing and unlock a million new homes.”
What did the industry have to say?
Initial reaction from the industry has suggested frustration at what many see as a ‘missed opportunity’ by Sunak.
Timothy Douglas, Policy and Campaigns Manager at trade body Propertymark, said the Chancellor’s spending review provided some good news but leaves a lot to be desired.
“A rise in the national living wage is good in principle but with inflation expected to top 4% by the end of the year, higher household bills from the ongoing energy crisis, a cost-of-living squeeze, and the cut to Universal Credit, it is unlikely to provide the boost to incomes that’s needed,” he said.
“The £65 million funding for those in rental debt provides some support but the devil is in the detail. Almost four million low-income households are in arrears with their household bills, yet this money will be targeted at those who are most at risk of homelessness, excluding a significant number of others from help.”
He added: “A £1.8bn fund for brownfield homes and £11.5bn for 180,000 affordable homes is welcome, but the latter is not new money and only 32,000 of those homes will be social rented housing – a mere third of what is needed which is simply not enough when council waiting lists are predicted to almost double to 2.1 million by next year.”
Knight Frank also appears to be sceptical. Anna Ward, senior research analyst at the agency, said: “The government’s confirmation of a £1.8 billion brownfield fund will help alleviate some of the impact of the pandemic on new homes output. As ever, the devil will be in the detail.”
“There are questions marks over how quickly this can be rolled out and which areas it will target to help ease housing shortages.”
And Savills’ senior research analyst, Lawrence Bowles, commented: “The government leaked news of the £1.8 billion funding for brownfield housing development earlier in the week. This works out at £11,250 per home.”
“…Whether this funding will be enough to meaningfully shift development focus where previous governments have failed to implement brownfield-first policies remains to be seen, and it is unclear how the funding will deliver the significant number of new homes needed.”
From a property standpoint, it seems the Budget was lower key compared to the previous ones, which saw major announcements like the stamp duty holiday.
However, there are key elements to be mindful of that are likely to have a bearing on the market over the coming months.
Here at Kings Group, we can help you to remain compliant and get the most from the sale of your home. For more information on how we can assist you on your sales or letting journey, please contact one of our branches in Essex, London or Hertfordshire today. We also offer a free and instant online valuation to give you an idea of how much your home could be worth on the current market.
