Given that the Budget yesterday was designed to boost economic growth, it was somewhat surprising that housing was completely overlooked. Not even given a mention by the chancellor Jeremy Hunt.
With no fresh support for first-time buyers, a failure to provide solutions to the widening supply-demand imbalance in the market, and nothing to incentivise buy-to-let landlords to continue investing in the PRS, the property industry reacted rather negatively to the Budget statement.
Industry reactions:
Nick Sanderson, CEO at Audley Group: “Another opportunity for housing reform has sailed on by. An innovative Chancellor would have used his time at the dispatch box to set out reforms that place as much emphasis on later living as first-time buyers. It was unrealistic to expect a stamp duty holiday in the current economic climate, but Jeremy Hunt, chancellor, should have considered stamp duty reform. In its current guise it’s a brake to the whole market, which in the long term costs the Treasury more.
“If there is no fluidity, people stay in family homes that are too big and unsuitable for them. Unsuitable housing leads in turn to more pressure on a stretched NHS compared to a pre-emptive move to a property that can adapt as people age. And yet more housing is needed for first time buyers at a time when there is already a serious deficit.
“In contrast there is a desperate need to increase the provision of age specific housing in the UK, but the sector has been largely ignored by successive chancellors. There is little time to waste. The groundwork must start now, if we are to see any benefit in the next few years.”
Nick Leeming, Chairman of Jackson-Stops: “While high energy costs were front and centre in the Chancellor’s statement, today’s announcements missed an opportunity to tackle the climate conundrum in the long term for the UK’s housing stock. Homeowners want to play their part and make their homes more energy efficient but the cost of doing so and lack of clarity on what needs to be done is holding them back.
“Funding and support to help homeowners retrofit and install low carbon heating currently does not go far enough, feeling convoluted and vastly inaccessible for many. The government’s target of reducing domestic energy usage by 15% by 2030 is ambitious and won’t be possible without a joined up effort from government and the property industry alike. Introducing zero-rate VAT for building repairs on period property to encourage essential maintenance would be well received, going beyond just energy efficient materials as we know such upgrades cannot be done in isolation. Longer-term measures to ensure that our historic homes are protected, means making them fit for the future now.
“Now is also the time for the government to consider how to make our existing housing market more liquid to support economic growth, as new housing delivery is in decline. Measures such as offering a tax break incentive for downsizers – or indeed right-sizers – to find a home that suits their changing lifestyle, would free up much needed housing stock at the middle and upper end of the market, and one that could be well received amongst older homeowners who are suffering most with high energy costs.
“New reports suggest that the over-65s are bearing the brunt of the energy crisis, in some cases having to pay £611 more per year on bills than under 30s, due to the increased likelihood of them owning a house for a much longer stretch of time and therefore without the impetus, or in some cases, funding, to renovate to become more efficient.”
Chris Norris, policy director for the National Residential Landlords Association: “The Chancellor spoke of growth yet did nothing to introduce the pro-growth measures that are necessary if the private rented sector’s supply crisis is to be addressed.
“The current system, under which landlords are penalised for providing new homes to rent, only makes it tougher for many renters to access good quality rental properties. Without a comprehensive review of how the sector is taxed, supply and demand issues will only become more acute as time goes on.
“The Budget also does nothing for those who are in receipt of housing benefit payments, who will continue to face an unjust freeze on the support they need.”
Jonathan Hale, head of ESG Consulting at Knight Frank: “It is disappointing that today’s Budget lacked more meaningful measures to support business addressing the urgent needs of the planet. Real estate companies are leading the charge in addressing the sector’s contribution to climate change but need the government to mitigate the associated risks and create more opportunities for positive impact. The Chancellor missed the opportunity today, for example, to introduce tax incentives for reducing embodied carbon in retrofit and refurbishment projects.
“The UK urgently needs more meaningful net zero targets, particularly following Client Earth’s successful lawsuit against the Government last year on its lack of a clear and credible plan on how it will reach its 2050 net zero goal.
“The Skidmore Report, released at the start of this year, in part addressed this point by calling for a minimum EPC rating for all homes sold or rented by 2023 and requesting the introduction of legislation mandating a minimum EPC B rating for commercial properties by 2030.
“However, the government needs to rapidly accelerate its support for those on the path to net zero by creating a clearer framework of rules which work for all and which are connected to the cross-industry goal of reaching net zero by 2050.”
Ben Woolman, Director at property firm Woolbro Group: “The bewildering absence of support for first-time buyers and the property sector is a catastrophic misstep for the Tories which could cost them in the next general election.
“The Government is fully aware that it is more difficult than ever to get onto the property ladder, yet its inaction is paving the way for a potentially devastating defeat at the next general election — and the opposition knows this.
“Labour is already drawing up battle lines by announcing it will seek to reform Britain’s outdated and ineffective planning system, sending a clear message of support to the property sector.
“The Tories have kicked the can all the way to the end of the road. To stand any chance of winning over the votes of first-time buyers, it must start taking the housing crisis seriously.
“An obvious and overdue starting point is to replace the Help to Buy scheme, which helped hundreds of thousands of first-time buyers onto the property ladder.
“Secondly, it must renege on plans to make housing targets for advisory only, ensuring that underperforming planning authorities are held to account when they fail to hit targets.
“Lastly, and most importantly, it must bring planning reform back onto the table.”
Dominic Agace, chief executive of leading estate agents Winkworth: “The Office for Budget Responsibility forecasts are the best news for property market, with 0.2% contraction compared to 1.4 % in November and inflation reducing to 2.9% by year end. This could mean that interest rates have peaked and we will see more certainty entering the market .
“We are in a vastly different place to the days post-Truss Budget and its uncertainty. Now we have a completely different property market to Q4, with a totally different outlook. In this regard, no action has been the best stance by the Government for the property market.
“That said, it is disappointing that we have seen no action to help supply in the rental market, addressing the housing supply shortage crisis or any indication of support to fulfil a previous manifesto pledge to hit 300,000 new homes per year. It is also unhelpful that we have seen no new successor to Help to Buy or social housing funding.”
Richard Campo, Founder of Rose Capital Partners: “I’m disappointed to say that there was nothing in the Budget to alleviate the pressures on the UK housing market but with 20 housing ministers since 2010 and a lack of continuity and foresight over this period, the consequences of inaction are now really biting, and will only get worse until this issue is addressed.
“There are two simple [but hard] solutions that can solve this:
“Firstly, we need to build more homes! According to the think tank, Centre for Cities, at the current rate, it will take us 50 years to catch up with demand, even if we started building 300,000 homes a year, which we are not currently doing. It’s time for the Government to step in and focus on newer construction methods, create more jobs, keep house prices lower over the long term, increase the number of first-time buyers and make more affordable rental homes available. There are strong economic arguments for doing so.
“Secondly, we need to reverse the tax treatment on Buy To Let properties that was introduced in 2017. Rents are soaring due to landlords exiting the market, and this will only get worse before it gets better. This is only a small revenue earner for HMRC in relative terms, and encouraging existing landlords to remain in the market and attracting new landlords will help to ease the housing crisis.
“It really is that simple, although I appreciate that simple things are still very hard to do (such as why we skip our morning run and have a bacon sandwich instead!). However, it’s time for the Government to step up and take action.”
Adam Oldfield at Phoebus: “We were told not to expect a budget with sweeping changes and unfortunately, as far as the housing market is concerned, that’s exactly what we got. There were measures to alleviate the rising cost of living and get more people back into work, which may give a boost to confidence. However, it is clear that the growth the government is expecting to see from the measures announced in the budget is not expected to come from the housing market, despite growth being a priority.
“Once again, despite many calls for change, the Chancellor has skipped over stamp duty land tax. The antiquated tax is a costly barrier but unfortunately, at over £14bn last year, it contributes far too much to the treasury’s purse.
“Nonetheless, the housing market is notoriously resilient. So perhaps it will be enough that the OBR expects inflation to come down to 2.4% by the end of the year, while the economy continues to grow, for interest rates to steady and for confidence to return.”
