On a day where the Bank of England dramatically stole the thunder from newly appointed Chancellor Rishi Sunak, we take a look at what today's Coronavirus dominated budget had to offer the housing industry.
With so much being needed to be done for key areas such as health, education, infrastructure and policing, you would be forgiven for thinking that there would be little left in the kitty for the housing market.
So how did we do?
The Affordable Homes Programme was extended with a new, multi-year settlement of £12bn. Nearly £1.1bn of allocations from the Housing Infrastructure Fund to build nearly 70,000 new homes in high demand areas across the country was confirmed as was around £650m of funding to help rough sleepers into permanent accommodation. Buying up to 6,000 new places for people to live and enabling a step-change in support services.
Possibly the biggest housing-related announcement was the 2% increase on Stamp Duty for non-UK residents. Many will see this having a major impact on property demand in major cities across England, potentially causing a shortage in rental homes as overseas-based landlords try elsewhere. The flip side of this, of course, is that it could also free-up competition for domestic landlords, encouraging them to invest and providing more homes for the UK's swelling tenant population.
As ever, the property industry was quick to react. Here's what they're saying:
Penny Mosgrove, CEO, Quintessentially Estates, comments: ‘’As expected the coronavirus emergency dominated today’s budget and I was pleased to see the Chancellor’s tone reflected what we’re seeing in our industry – business as usual as much as possible. We’ve just completed on various million-pound deals in the UK and have active deals in Germany and other locations hit by the virus with requests still flowing in with property requests north of £20m for holiday homes in Europe. We also plan to announce new global office openings in the next few weeks. It was encouraging to see £30bn fiscal stimulus including spending on NHS and increased sick pay, additional government loans and business rate cuts. Interest rates were also slashed from 0.75% to 0.25% in a bid to keep the economy on track during the outbreak.’’
‘‘The announcement that non-UK-resident buyers will face a stamp duty surcharge of 2% on UK property purchases from April 2021 will send slight shockwaves across the London residential market, even though we knew it was coming. Although I welcome the news that receipts are to be used to tackle rough sleeping, it feels wholly counter-productive to target international investment, particularly as the Prime Minister continues to repeat his bold ambition that the UK is ‘open for business’ ahead of December’s Brexit deadline.
"The new policy from Rishi Sunak comes four years after Philip Hammond introduced a 3% SDLT in 2016 for those buying second and buy-to-let properties – a measure which was aimed at curbing landlord investors. Today’s announcement means overseas investors who already own a home could end up paying up to 17 per cent in stamp duty on the portion of the purchase price over £1.5m. This seems like an outright money grab by the government on foreign buyers who are vital to supporting a healthy residential market.’’
‘’The pledge to triple the average net investment made over the last 40 years into rail and road infrastructure, as well as connectivity, is, however, a welcome boost and badly needed in parts of the UK. The road from where I’m from in Newcastle to Scotland, for example, is still a single carriageway part of the way and this simply must be improved. It’s been the same since I was a child growing up in the North East and they have always promised they would fix it – I hope this time they mean it!’’
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. Attempts to ease affordability pressures in the wider housing market should be welcomed, although the new measure will need to be monitored carefully to ensure there are no unintended consequences, including for the forward-funding of new-build developments. Furthermore, a wider re-think of stamp duty rates is still needed to increase housing market liquidity and maximise any stimulus the government plans to provide to the UK economy.”
Janet Armstrong-Fox, Partner and Head of Private Client Property at Collyer Bristow LLP comments: “Any overseas buyer will almost certainly already be paying the extra 3% SDLT that the purchase of any second home attracts, so the additional 2% as an overseas buyer will be a further disincentive to invest here. After a short-term flurry of activity before April 2021, the 2% overseas buyer surcharge will have a detrimental effect on the London property market in particular with the knock-on effect of deterring overseas interest in the UK at a time when the UK needs to be seen as very much open to the world for investment and trade.”
Nick Sanderson, CEO, Audley Group, comments on housing investment: “The Budget has again focused on building new houses. Yet another missed opportunity to support specialist housing rather than indiscriminate building. We don’t need 70,000 new homes. We need to free up existing housing stock to bring movement to the housing market and provide more people with homes that are suitable for their current needs. The focus needs to be on long-term solutions rather than headline-grabbing numbers.”
Jane Ho, Director of Health at HKS Architects, comments: “Of course it’s great to hear that work will start on building the 40 new hospitals promised by the government. However, questions remain over whether we have the processes in place to procure major acute facilities and it will obviously be a number of years before we see patients treated. It’s therefore vital the government also continually invests in improving the hospitals as well as local community health services we already have to ensure they are up to scratch for the demand. They also need to ensure there is enough funding left in the pipeline to maintain the hospitals once they are built, and adapt them as needs change in the future. The current climate of a global epidemic has really shone a light on the need for new hospitals to be flexible and easily adaptable, not just spatially but with its infrastructure, so we can, for example, insert isolation lobbies and quarantine spaces on a temporary basis.”
James Kirimy, GM for rental marketplace Spotahome UK and Ireland, commented: “We were hoping for more news about the rental market from today’s budget, particularly addressing current concerns from the buy-to-let sector that have caused the appetite of UK landlords to dwindle.
"While we would have liked to see some positive focus for both UK tenants and landlords, the rental sector continues to be a thriving community supported by a backbone of UK landlords, supplying the much needed rental stock for those who would otherwise struggle to put a roof over their heads.”
Glynis Frew, CEO of Hunters, comments: "Thankfully some stability in housing when some stability is required. It’s a shame the same can’t be said when it comes to housing ministers! Some might be disappointed that a couple of rumours surrounding first-time buyer stamp duty relief didn’t come to fruition, but the reality is that it might just be too much of a hit to the Treasury. Stamp duty changes would represent a quick win but don’t address the bigger picture which is rooted in a lack of supply, and that’s where the emphasis needs to be from a policy and funding perspective.
"The support for the regional economies is a good example of that and it’s something we need to welcome with open arms as it’s crucial that those powerhouses in the regions continue on their journey after the uncertainty of the last few years. There are lots of exciting opportunities there and housebuilders and investors will be pleased to feel supported by central government.
"Today’s interest rate announcement will put a few fears at ease too, and provide some confidence for both the housing market and wider business community, not least SMEs. We must never overlook the role that SMEs, many of which make up the property industry, play in the economy. Without them, we’re in trouble!"
Rebecca Stott, Founder of FoundIt London, said: “Whilst I applaud The Chancellor for recognising the need for more affordable housing, building safety and to help provide accommodation for the homeless, I am disappointed that he didn’t provide more opportunity for those trying to save for their first home. I know I will have some very disappointed clients today! In particular, I hoped they would announce an increase in the stamp duty threshold for first-time buyers, taking it up to £500,000. With London prices out of reach for many trying to buy their first home, that extra stamp duty saving could have made a difference.
"They would have a much better chance of securing a property, and could probably afford something bigger or on a better road than what they could have got before. This would then have a positive knock-on effect for second steppers too, encouraging them to come to the market and provide more good quality stock.
"Having said that, the London property market is already super busy with first-time buyers. I am in the midst of five best and final offers, everything is going for the asking price if not more, and on the last three occasions when I’ve taken clients to an open house, there’s been over 20 people queuing at the door. I haven’t taken a client to property yet where nobody else has made an offer either. The market is very active for them, and so the irony is that if The Chancellor had increased the stamp duty threshold, there would be even more first time buyers making an appearance - ultimately increasing the competition even further.
"However, there was some good news before The Budget as the Bank of England announced a reduction in interest rates. This means it will be cheaper to borrow money for a mortgage. Every little helps when you’re a first-time buyer, and those who have recently bought their first home don’t need to worry that they have missed this opportunity as they can benefit too when re-mortgaging."
Melanie Leech, Chief Executive, British Property Federation comments: “The Budget today was always going to be more difficult than the Chancellor would have liked, given the immediate threat of coronavirus, but he has rightly balanced short-term interventions in response to the global health emergency and the Government’s long-term ambitions to level up the UK’s regions.
"Tripling the average net investment made over the last 40 years into rail and road, affordable housing, broadband and research is a necessary and serious statement of intent – to delivering improvements in productivity, economic and social wellbeing, unlocking private sector investment into the places where we all live, work and spend our free time, improving quality of life and enabling businesses to grow across the country.
“We fully support the Government’s ambitions to end homelessness and increase affordable housing, but the key to solving the challenge is to build more homes and overseas investment plays a key role in increasing housing supply across the country. The new Stamp Duty Land Tax surcharge for foreign buyers must not make it more expensive for responsible, long-term investors to invest in and develop more much-needed homes around the UK.
“Communities, wherever they are, should expect housing development to be supported with excellent infrastructure. The new allocations of the Housing Infrastructure Fund are therefore welcome and we are pleased to see those spread around the country. It is particularly important that we recognise different land values across the country and support the provision of infrastructure where land value may not support planning contributions.
“It is great to see the Government prioritising the remediation of high rise residential buildings. A dedicated fund is a much-needed support, though it will probably need further funding in future years if it is to meet the scale of interventions required. It is clear that the wider issue of building safety will take years to resolve and require a collaborative approach between all parties affected. How Government, therefore, plans its long-term policy approach on this issue is very important, with funding going hand-in-hand with what is in scope."
Camilla Wallace, Head of Private Client, Wedlake Bell, comments: “The heavily trailed additional SDLT surcharge for non-resident buyers of UK residential property is no surprise. However, an effective top rate of 17% might stifle any remnants of January's Boris Bounce particularly with the market contending with coronavirus and Brexit uncertainty.”
Elizabeth Bradley, Global Head of Tax at Bryan Cave Leighton Paisner, says: “It is no surprise that the Chancellor has confirmed an SDLT surcharge for corporate and individual non-resident purchasers of UK residential property to help tackle rough sleeping. However, the reduction in the proposed rate from 3% to 2% will be welcome, as will the delay on the introduction of this measure until April 2021. Had the Government introduced this before the end of the transitional period, it might have been challenged under EU law that it was discriminating against non-residents (EU or non-EU).”
Lara Mardell, Legal Director at BDB Pitmans, said: “As expected the Government has announced that there will be an additional 2% SDLT rate on purchases of residential property in England and Northern Ireland by individuals who are ‘non-resident’. While we understand the rationale for this, which is intended to help ease the housing crisis, we do have some concerns about the manner and timing of it. The definition of ‘non-resident’ used (in the prior consultation on the subject) was much wider than the usual statutory definition of this term, and many people who are currently taxed as UK residents will be subject to the ‘non-resident’ rate of SDLT. This is likely to cause confusion and add complexity to a tax system which is already extremely complicated. It also goes against the fiscal grain of having similar policies for residents and non-residents alike.”