March 6th 2024
Spring Budget: Housing targets to be treat with a ‘healthy dose of scepticism’
Although Jeremy Hunt successfully delivered the Spring Budget, it looks as though the government will not be delivering on their promise to supply more affordable homes.
At 12.30pm Chancellor Jeremy Hunt took to the stands in the House of Commons to deliver the 2024 Spring Budget, updating us on the country’s finances and economic outlook.
Arguably, one of the best decisions to come from the speech was the announcement that, from April, the National Insurance contribution rate will be cut from 10% to 8%, which comes on top of a 2p cut in the autumn statement that was delivered in November 2023. It is estimated that this cut would be worth around £450 a year for someone on a £35,000 full-time salary.
Against this backdrop, Mr Hunt also confirmed plans to extend the Household Support Fund for six months. The fund is distributed by councils across England to directly help those who are struggling with inflation. As well as this, the government plan on freezing alcohol and fuel duty in a bid to help businesses and people who currently can’t afford to drive to work.
However, despite these measures being designed to help people in need, when examined a lot more closely, it seems people will be no better off than before the Budget was announced. One particular area that still requires severe improvement is property.
Whilst delivering the Budget, Mr Hunt announced that the government will reduce the higher rate of property capital gains tax from 28% to 24% and that the government will abolish stamp duty relief for people buying more than one dwellings.
Moreover, Mr Hunt also confirmed plans to scrap the furnished holiday lets regime. The imitative gives tax relief on properties being rented out to holidaymakers and makes renting out to them more profitable than to long-term tenants. The move is expected to raise £300m a year for the Treasury.
It’s safe to say that these decisions were not met with a positive reception from experts involved within the housing sector.
Chief executive of Bradford-based Manningham Housing Association (MHA), Lee Bloomfield, said: ‘It is disappointing but not surprising that a commitment to build many more urgently needed affordable homes was absent from the Chancellor’s remarks.
‘Alongside the six-month extension to the Household Support Fund, the well-trailed cut to national insurance was welcome but it seems that will be paid for by phantom efficiency savings which, if they do not materialise, raise the prospect of further deep cuts to public services which are already in crisis.’
‘Those on middle and higher incomes will benefit most from the key Budget measures, particularly with the personal tax threshold freeze remaining in place,’ Lee added. ‘Housing association tenants were far from the Chancellor’s thoughts.’
Echoing a similar tone, Anthony Payne, president of ADEPT, claimed that the government’s budget seemed to be passing more financial burdens onto local authorities, so it no longer troubles them.
Anthony said: ‘While we welcome any new investment in our places, there is no escaping the fact that the place-based services ADEPT members are responsible for delivering are struggling. A budget focused on cutting tax and a patchwork of investment will do nothing to help local authorities deliver the essential services people rely on every day. Councils across the country are making extremely difficult decisions based on painful choices that will impact everyone but fall hardest on the most vulnerable in our communities.’
Commenting specifically on the decisions that directly affect the property sector, Oli Sherlock, managing director of insurance at Goodlord, said: ‘As predicted, this Budget didn’t deliver much in the way of housing reform. The most surprising announcement, and one that wasn’t leaked beforehand, is that the higher rate of property Capital Gains Tax will reduce from 28% to 24%. This will be welcome news for landlords, but could have the adverse effect of encouraging those on the fence to sell-up.
‘Alongside that announcement, the Chancellor confirmed the rationalisation of tax rules by abolishing the furnished holiday lettings tax regime. This is a sensible loophole to close and may help level up the buy-to-let sector and, hopefully, unlock more full time tenancy stock in tourist hubs, major cities, and coastal communities. For more meaningful changes, the sector will have to continue waiting for the Renters (Reform) Bill to finally become law.’
Likewise, Lauren Hughes, head of customer success at Vouch, claimed that the announcements delivered in the Budget delivered little surprise and that plans to deliver more affordable homes are way off in the future.
She said: ‘Of the many things the sector was calling for pre-Budget, very few materialised today, although there were a few surprises. Announcements included new tax rules for short-term lets, an unexpected reduction in capital gains tax, and the abolition of multiple dwellings relief (MDR). Together, they present a mixed bag for landlords and agents, and they will certainly be felt by certain sections of the industry.
‘However, despite promises for more house building, this is something that’s been heard before and is yet to materialise. It would therefore be understandable for the sector to treat the ambition to build a million homes in this Parliament with a healthy dose of scepticism.’
Image: Shutterstock
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