What does the Spring Budget 2020 mean for the housing market?

Mortgages & Money

Within hours of the emergency interest rates being cut as announced by the Bank of England, Rishi Sunak, chancellor, presented his maiden budget 2020 speech.

The time frame for such a significant speech was tight, with just a few weeks to come to an arrangement for the fiscal strategy the UK would go on to adopt. It was clear the topic of the statement would surround COVID-19 and how the UK will aim to be “healthy and financially secure” through the inevitable turbulence.

The severity of the past decade or so was put aside with a host of measures designed to bring back economic stability to the country, with both personal finances and corporate finances being addressed. The dramatic change that needed to happen as a result of the increasing severity of the virus could not have been foreseen just a month prior, causing a definite rushed sense of decision making.

Tackling head on the decision surrounding the coronavirus is the immediate priority, and rightfully so. The public need to stay on side whilst the Government push for care and consideration to those that need it.

Changes to the property market

Those that were hoping for some significant changes in Stamp Duty Land Tax (SDLT) will be disappointed. Whilst not a huge surprise to see yet another Budget pass without any significant changes to SLDT, you could argue this approach was the correct one.

Fiscal support to ensure that the UK’s finances are robust and willing to withstand the wider economic impact of reduced consumer spending due to the COVID-19 pandemic is the actual priority. We did have confirmation of an additional two percent Stamp Duty surcharge for overseas buyers to be introduced in Easter 2021.

Whether this increase will deter overseas buyers is yet to be seen. With constant currency fluctuations in recent times benefiting overseas buyers, this may be just a minor inconvenience and have little impact.

This may, due to the current weakness of Sterling, create something of a boom in the market from overseas investors. Estate agents across London are confirming this, with many making purchases immediately before the Budget announcement through fears of the immediate introduction of a SDLT increase.

With the introduction of increased SDLT to overseas buyers, it is likely that this additional cost will be factored into the offer on a property, resulting in prices potentially being pushed down in areas, particularly for expensive properties priced over £1 million in the capital. What this will mean for UK buyers and whether this will have enough of an advantageous effect will remain to be seen.

Additional impacts on the market

It was also announced that £1 billion of funding would be introduced to remove any unsafe cladding from existing residential buildings off the back of the 2017 Grenfell tragedy. This will be a relief to those in similar housing.

We received confirmation that an extension will be made to the Affordable Homes programme coupled with an allocation of £640 million to help rough sleepers into accommodation. Yet, we did not receive any information on the predicted introduction of ‘mansion tax’ that would go some way to help first time buyers enter the market.

Getting on the market remains a top priority for Britons, so finding a home that is affordable with good transport links is important. Experts predict that, with house prices continuing to rise, not enough was done to aid first time buyers.

Whilst the commitment to build 300,000 new homes continues to act as a boost to stakeholders, more needs to be done though to encourage stability and aid those entering the market. With that being said, the Budget 2020 has offered positive signs that the market will stabilise and see continued health.

The consensus was positive

Whilst there was a mixed response in general, the consensus is that the budget delivered by Mr Sunak was one of the most dynamic Budgets delivered over the past decade or so, with most appreciating the severity faced with the unprecedented events we are currently facing.

Whilst it is fair to say that some will fear the changes are too ambitious, or that the funds should have been allocated differently with too much money committed to several areas, the Budget 2020 addressed the majority of areas that those affiliated with the property market were asking out for.

With the second Budget scheduled in for Autumn, many of these issues will be addressed yet again. With the circumstances changing so frequently in the market, the Chancellor will be making many points that we cannot foresee at this point.

Given that Mr Sunak was essentially thrown in at the deep end, many will agree that the approach taken was positive and well informed. The chancellor could well be essential in keeping the nation’s economy afloat through these difficult times we face.