It’s fair to say that the current economic turmoil caused by the Coronavirus, COVID:19, has overshadowed a lot of the run-up to the March budget. Experts had, for some time, been hotly predicting what Chancellor Rishi Sunak would deliver based on the Conservative’s winning manifesto.
However, before the Chancellor had a chance to make the headlines the Bank of England announced a cut in interest rates from 0.75% to 0.25% in a bid to restore confidence amid the COVID-19 pandemic.
This is likely to be seen as short term intervention but the winners are those looking to remortgage once lenders have a chance to introduce new products. While the losers continue to be savers.
Overall the budget was weighted heavily towards immediate, as well as medium-term, relief for those that inevitably will become affected by Coronavirus and its effects on the economy. Yet, among the Chancellor’s big-spending pledges and COVID-19 action, there were some housing-related matters.
- Extend the Affordable Homes Programme with a multi-year settlement worth £12bn
- A £400m new fund to build on brownfield sites
- £643m of funding to help rough sleepers into permanent accommodation – offering up to 6,000 places for people to live
- A 2% increase on Stamp Duty for non-UK residents from April 2021
- The government will invest an additional £1 billion to remove unsafe cladding from residential buildings above 18 metres to ensure people feel safe in their homes
What does this mean?
The pledge of additional funds towards the Affordable Homes Programme is to ‘get Britain building’ over the next five years, with the Chancellor claiming it would be the ‘largest investment in affordable housing for a decade’. He added that 70,000 homes would be built in areas of high demand.
While the additional support is much needed there is still a question over whether developers can manage to fulfil the Government’s promise to deliver quality homes to the deadlines they have set. Only time will tell on this.
The stamp duty fee on foreign investors seems to be a bit of a sticking point for some industry experts who see it being a huge turn off to those, especially in and around London, that are cash-rich investors.
On the other hand, it’s also not supporting those that are struggling to get onto the property ladder as while the duty may put off overseas investors the majority of the properties bought by foreign investors are homes that aren’t affordable for first-time homebuyers anyway.
However, as reported by Homes & Property Tom Bill, head of London residential research at Knight Frank said: “The introduction of a surcharge for overseas buyers will bring the UK into line with many other global property markets.”
The new surcharge for overseas buyers is expected to affect 70,000 of the UK’s total 1.2 million annual property transactions. As a result, the Chancellor said the money raised from this tax will be used to fund 6,000 new homes for homeless people.
Disappointingly, the housing market didn’t see any big announcements, especially for first-time buyers that are calling out for more government support in getting onto the property ladder.
Nevertheless, let’s not be quick to forget that today’s budget was actually the first of two planned in 2020. To give this some context the March budget is the delayed 2019 budget while there will be an Autumn budget as normal.
With many precautionary measures in place to keep the economy moving while the UK deals with the fallout of COVID-19, we hope that come Autumn the worse is behind us. Perhaps this will be the opportunity for the government to announce more about its First Homes scheme which will deliver discounted homes for local people.