Housing news from the Budget
In the current climate, there is uncertainty in all of our lives with both health and financial concerns. However, while we are all understandably focusing on the here and now, it might be worth using this time to take a step back and review your long-term financial wellbeing as well. This newsletter takes a look at some of the areas you might want to consider. Of course, we are on hand to support you through any challenges ahead.
In March, Rishi Sunak’s debut Budget tackled the Covid-19 outbreak head-on, responding with a fiscal stimulus of £30bn to support the NHS and businesses.
In the first of two Budgets this year, relatively little was announced about housing. The agenda did include new taxes for overseas property buyers. From 1 April 2021 non-resident buyers of homes in England and Northern Ireland will have to pay a 2% Stamp Duty Land Tax surcharge, tempered down from the 3% surcharge outlined in the Conservative election manifesto. This measure is expected to affect 70,000 of the UK’s total 1.2 million annual property transactions.
Other housing measures include an extension of the affordable homes programme (£12.2bn funding), a 1% cut for local authorities in interest rates for social housing, a £1.1bn allocation from the Housing Infrastructure Fund to build 70,000 new homes in high-demand areas and funding to remove unsafe cladding. In all, over £600bn is to be spent on roads, rail, broadband and housing by the middle of 2025.
In addition, the Chancellor announced that Robert Jenrick, the Secretary of State for Housing, Communities and Local Government would set out comprehensive reforms to overhaul Britain’s planning system. Outlined the following day, these reforms will aim to create a simpler planning system and improve the capacity, capability and performance of Local Planning Authorities (LPAs) to accelerate the development process.
The Bank of England chose Budget day to announce an emergency cut in its base rate from 0.75% to 0.25%, returning it to its lowest level in history. A further emergency cut to 0.1% was announced on 19 March. The Bank said its role is: “to help UK businesses and households manage through an economic shock that could prove sharp and large but should be temporary.” Good news for home buyers, those looking to remortgage and those on base-rate tracker mortgages. The large number of homeowners who have already taken advantage of lower lending rates to secure a fixed mortgage will not benefit. Also, many aspiring first-time buyers saving for a deposit may initially suffer downside from the base rate move, as banks and building societies may opt to cut their savings rates.
Some housing industry commentators have expressed disappointment that there were no initiatives announced to help first-time buyers, replace Help to Buy, or measures proposed to reform Stamp Duty.