November 4, 2021
What were the key announcements in the Budget and Spending Review?
Wednesday October 27 marked the government’s latest budget and spending review. Chancellor Rishi Sunak set out several pledges across all UK sectors to navigate a ‘post-Covid era’.
“Today’s Budget does not draw a line under Covid. We have challenging months ahead.” He told the Commons.
“And let me encourage everyone eligible to get their booster jabs right away. But today’s Budget does begin the work of preparing for a new economy post-Covid.”
“The Prime Minister’s economy of higher wages, higher skills, and rising productivity. Of strong public services, vibrant communities and safer streets. An economy fit for a new age of optimism.”
Such measures included short-term and long-term changes to Business Rates. It will be of interest to agents and other property professionals. As well as billions of pounds of funding for the NHS and wage rises for millions of workers.
There was little mention of property, with the high-profile issues of stamp duty, Inheritance Tax and CGT taking a backseat.
Below, we outline key elements of the Chancellor’s speech and the industry’s reaction.
What housing measures did the Chancellor reveal?
Sunak confirmed there will be a £5 billion grant to remove unsafe cladding from the highest-risk residential buildings. It will be funded through a Residential Property Developers Tax. And levied on developers with profits over £25 million at a rate of 4%.
The Chancellor also reiterated the government’s levelling up agenda. It revealed that 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. This is the largest cash boost in a decade, according to Sunak.
Some £11.5 billion of these funds will go towards the construction of affordable homes. With the focus trained on developing brownfield sites.
In his speech, Sunak said: “We are investing more in housing and homeownership with a multi-year settlement totalling nearly £24 billion.”
“The government will provide £11.5 billion to build up to the 180,000 new, affordable homes the country needs annually. This is 20% larger than the previous programme. We are investing an extra £1.8 billion. It will be 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.”
In small print released after the Budget, the deadline for filing a tax return in reference to the Capital Gains Tax (CGT) will be extended from 30 days to 60 days, from midnight.
With virtually no announcement on CGT, those in the lettings sector can bide their time. But those who have been calling for a more simplified tax system will likely be disappointed.
What was the reaction from the industry?
Initial reaction from the industry has suggested frustration.
Marc von Grundherr, director of London agency Benham and Reeves, cited the Budget as ‘disappointing’. He said: “The Chancellor has chosen to give the sector a bit of the cold shoulder with just a handful of headline figures. Clearly believing his job is done having fuelled house prices to record highs via the recent stamp duty holiday.”
“We need more homes to satisfy our ever-growing appetite for homeownership. An insignificant level of brownfield development is more of a slap in the face than it is an outstretched hand. As for the £11.5 billion pledged for 180,000 affordable homes, it’s a start. But hardly news given it was announced by former Housing Secretary Robert Jenrick a year ago.”
Meanwhile, Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “This could be regarded as a reprieve for the housing industry. Many feared they would be clobbered one way or another, whether that was through higher capital gains tax or other measures which would have an impact on activity.”
“When you don’t see much of anything, it is effectively the Chancellor saying he is happy with the way the market is operating at the moment and doesn’t wish to rock the boat. More help with regards to energy efficiency would have been welcome considering this is such a big target for the government at the moment.”
He added: “Good EPC ratings are still not a high enough priority for aspiring or existing homeowners. However, tax breaks might increase energy efficiency and retro-fitting supported by green mortgages and more generous green homes grants. However, it’s important to not reduce the value or saleability of older, unmodernised properties or discourage their improvement.”
With no major proposal announced, it appears the Budget was much more subdued from a property perspective, compared to previous recent Budgets which introduced the likes of the stamp duty holiday.
That said, there are still some key elements to consider that are likely to have a bearing on the market over the coming months.
With plenty of activity in the housing market as of late, it’s vital that you work with an experienced estate agent. If you have any questions about selling a home in the London area, Atkinson McLeod is here to help.
To find out more about our services and current operations, please get in touch with our expert team today. You can find out how much your home could be worth on the current market by requesting a free and instant online valuation here.