The Importance of the Spring Budget 2020

Mortgages & Money

With the country continuing to face a housing crisis, questions over whether the Government will provide the millions of homes needed across the country continue to arise, will the Spring Budget 2020 answer some of these questions?

Previous administration has failed to deliver on promises to introduce better housing solutions at greater scale, and the current Government appear to currently be headed in the same way. It is estimated that over 300,000 new homes would need to be built each year to meet current demand, but the government are falling significantly short of this target.

As much as the Government are falling short of the target, acknowledgement of the issue is a good first step. As issues arise, the real concern is whether the Government will stick to previous promises.

The National Infrastructure Strategy

Previous chancellor Sajid Javid introduced the National Infrastructure Strategy (NIS) that committed a massive £100 billion to the scheme with the aim to transform the UK’s infrastructure landscape. This investment would have a positive knock on effect in the housing sector, helping toward the housebuilding goal.

The benefits of an investment on this scale would extend outside of the capital to a number of other major regional hubs across the country. The Infrastructure Strategy would aim to ensure that communities are well connected, with utilities in place to support growth across all major cities in the UK. Some examples of what this is likely to include are projects like HS2 and the Northern Powerhouse Rail.

Using data recently gathered by property website Zoopla, cities that have experienced development are seeing positive growth. The West Midlands for instance recorded a daily growth in house value of £36. Those with property in these areas will welcome further investment into infrastructure to support this growth.

As with most things that requires high levels of investment, there are various drawbacks that could come with the NIS. The biggest one here being a lack of focus.

Tackling the housing crisis will require a joined-up approach that goes beyond just construction of new property. With £250 million pledged for the construction of 20,000 new homes being a positive step, this is only a small part of the NIS. Whilst the Government have not confirmed plans to tackle the entire problem, if the past is anything to go by, we often see more words than action.

What can the Government do?

So, what else can the Government do to tackle the housing problem? A starting point will be the previous policies mentioned to come to fruition.

A few examples here, the first being Boris Johnson during the election campaign promising to create a stamp duty surcharge for foreign buyers. As much as investment from overseas is positive for the economy, the shortage of suitable housing in the UK for first time buyers is a problem.

By making it harder for overseas buyers to buy up property in the UK, more housing will be available for those that need it, though it should be said that the majority of overseas buyers go on to rent property out again, something that is continually growing in demand by millennials.

This was heavily supported in a recent survey we carried out from homeowners across the country. 70% of respondents supported this change to stamp duty – the Government should take note.

The plan to increase community engagement in the development stages of new build properties have also received similarly high levels of support. The ability for those that live near new build properties to have a say in its development has been proven to increase sales of the units through greater local understanding.

These could be easy and cost-effective ways to aid the housing market and continue the vital steps to tackle the housing crisis.

The importance of the Spring Budget

Whilst a lot rests on the aforementioned changes, the sector has bounced off the back of Government action. The passing of the EU withdrawal bill has provided clarity in the market. Whilst we are likely to see some bumps as a result of the UK’s withdrawal from the EU, many experts are predicting that in a few years’ time, the economy may well be better off.

The imminent Spring Budget will give Johnsons administration the opportunity to commit to previous promises, as well as additional intuitive ways to tackle the housing crisis.

The construction plans and NIS that have been proposed are encouraging signs though. The level of funding suggested to support the sector will have a positive knock on effect to the wider economy and the property sector.

The housing crisis needs to remain a separate issue with independent solutions to tackle the problem. The Conservatives must follow through on previous promises mentioned through the election campaign, whilst introducing a joined-up approach that is required to spark greater new build properties and ease pressure in the market.