Yesterday’s Budget contained no surprises and was relatively underwhelming in terms of announcements on matters that will immediately affect the property market. For that, we should look forward to the Bank of England Monetary Policy Committee meeting on November 4th when an interest rate rise is almost certain to be agreed.
Here we list the handful of measures that do concern the property industry.
Retail, hospitality and leisure firms have been handed a 50% business rates discount by the Chancellor in his autumn budget worth a claimed £7 billion.
Other initiatives include more frequent rates evaluations, a cancellation of next year’s planned multiplier increase and incentives to improve property’s environmental performance.
This will hopefully encourage an increased uptake in the commercial property market but the effects of lockdown and e-shopping are still emerging and may take some time to fully appreciate.
Alex Tross, Centrick’s Commercial Property Director commented, “It’s fantastic to see the business rates discount which should hopefully revitalise High Streets across the country but it remains to be seen whether this translates directly into people’s day to day activities as we still get to grips with a ‘new normal’ way of life.”
The Residential Property Developer Tax
The chancellor confirmed a £5 billion spend on cladding, funded by a levy on larger builders in order to put right hundreds of tower blocks following the Grenfell tragedy four years ago.
“The Chancellor’s announcement that funds are being put into fixing unsafe cladding, is a vital move to help first-time buyers, who have been stuck in their properties unable to sell them and facing crippling costs,” says Stuart Macdiarmid, Associate Sales Director at Centrick Birmingham.
“The resolution of this has to be a priority, to open up a section of the housing market where people have been unable to mortgage the property and release those looking to move up the ladder. We just hope that this move is enough to cover the scale of the problem.”
End of Help to Buy
Extensions to the government’s Help to Buy scheme have been a familiar feature within budget statements, but not this time. Already announced, the scheme will now close in 18 months’ time. Its subsiding effects on the housing market should not be underestimated – for example, builder Bellway this week said it would scale down its operations ahead of the scheme’s demise.
“Closing the door on help to buy will affect developers coffers undoubtedly, but couple this with tax hikes aimed at housebuilders and the very real fact that the flat market is, well, flat, means housebuilders – especially SMEs around the country – might have a tough year ahead and this may be the perfect storm to reduce the number of homes being built,” says Christiana Plati, New Homes Manager at Centrick
Green Grants for Homes
Measure to make the nation’s homes greener were announced last week, but Sunak also revealed that some £3.9 billion is to be allocated to de-carbonising homes, something many lettings and sales agents may get involved in directly, as minimum EPC standards are brought in firstly for rented properties and eventually for owner-occupied homes too.
“It is encouraging to see the Chancellor earmark funds for helping homeowners to make their properties more energy-efficient, however, the current support packages still represent something of a drop in the ocean in terms of what needs to be achieved and more can and should be done to support the move towards greener homes and mass consumer adoption,” says Andy Butts, Group Sales & Lettings Director
The Chancellor revealed a further £1.8 billion earmarked to increasing housing supply.
This includes £300 million locally-led grant funding that will be distributed to local authorities to unlock smaller brownfield sites for housing and £1.5 billion to regenerate underused land and deliver transport links and community facilities, unlocking 160,000 homes in total.
“Regenerating brownfield land can be notoriously expensive, so the additional funds to support Councils’ remediation efforts is to be welcomed,” continues Andy.
“This latest tranche of funding for brownfield land, in addition to the £400 million Brownfield Housing Fund and the £75 million Brownfield Land Release Fund, indicates that the Government may be serious about the ‘brownfield first’ pledges that Johnson made in his conference speech earlier this month.”
A £65 million invest has been announced to ramp up England’s planning system, including digitisation that will make local plans easier to access and £9 million to help local authorities create 100 new urban “pocket parks” across UK
“Streamlining the planning process is the start of great steps forward to modernise the British Housing Industry and the added bonus of more green space for our local authorities ties into this governments vision of a greener future for our urban areas” commented Jane Morcom, Group Business Director.
So no surprises for the industry as a whole and some glimmers of hope for continued sweeping reforms to the sector under Michael Gove but with interest rate increases on the horizon, it remains to be seen whether these policies address the real problems in the industry or just paper over the cracks…