Budget 2020: Housebuilding commitments miss the mark

Against the backdrop of the ongoing global crisis around Covid-19, Rishi Sunak has delivered his first Budget speech to the House of Commons.

The chancellor of the exchequer implemented many safety measures for coronavirus and announced changes to business rates as well as the levels of housing investment and stamp duty.

Sunak also announced a review of the UK fintech sector and the construction of 70,000 new homes in areas of high demand.

“The Budget has again focused on building new houses,” said Nick Sanderson, CEO at Audley Group.

“[However, it’s] yet another missed opportunity to support specialist housing rather than indiscriminate building.

He claimed the industry needed to free up existing housing stock to bring movement to the housing market and provide more people with homes that were “suitable to their current needs”.

Nick stated that the focus should be on “long-term solutions rather than headline-grabbing numbers”.

As part of the Budget, £12.2bn was pledged to the affordable homes programme from 2021/22 and £400m of investment was announced for the mayoral combined authorities and local areas to establish housing on brownfield land across the country.

Michael Stone, founder and CEO at Stone Real Estate, suggested that the focus on brownfield alone would do “little to solve the housing crisis”.

“…We have heard this a few times before.

“New-build numbers are indeed higher now than for some time, yet Sunak, [housing secretary Robert] Jenrick and co would be wise not to rest on their laurels as this Budget seems to indicate they are.”

Jonathan Sealey, CEO at Hope Capital, stated that it was “encouraging to see that the government is also looking at ways it can help both big business and SMEs while the country is in the grip of coronavirus”.  

Jonathan added that lenders had to deal with the “challenging time” in a “sensible and flexible manner”.

“…I was, therefore, pleased to see the government acknowledging the extra costs to business and the danger of cash flow problems with the promise of support when we need it.”

Commenting on the 2% stamp duty surcharge for foreign buyers, Tomer Aboody, director at property lender MT Finance, said that it came as “no surprise”. 

“But this might not be such a huge issue for them given that sterling is at such a low level.

“With values in the prime market taking a well-publicised hit, non-UK property buyers are still purchasing at what they consider to be below-market level.”

John Phillips, national operations director at Just Mortgages, stated that the surcharge was something that he’d “argued in favour of for a long time”.

However, he added that a “reduction in stamp duty elsewhere” was also needed.

“As the Institute for Fiscal Studies has said, stamp duty is a tax on transactions, pure and simple, which freezes up the market and means people don’t get to live in homes that meet their needs.”

According to Chirag Shah, CEO at Nucleus Commercial Finance, the abolition of business rates in 2020 for a number of SMEs with a rateable value below £51,000 would “create a level playing field where the high street can once again compete with online retailers”.

“While this announcement provides immediate relief to small businesses, the chancellor must now deliver long-term plans for the future of business rates in the Autumn Statement.”

In response to the announcement of a review into the UK fintech sector, Rhydian Lewis, CEO at RateSetter, said: “The UK’s reputation for fintech innovation across investments, payments and banking is second to none and the fintech industry is delivering greater value, utility and financial inclusion to many millions of people.

“The fintech sector is maturing and becoming mainstream, and I warmly welcome the chancellor’s timely announcement of a strategic review to ensure that the best fintech businesses can scale up to become major financial brands, both in the UK and internationally.”

Vikki Jefferies, proposition director at PRIMIS Mortgage Network, described the chancellor’s pledge to increase investment in new housing stock as “promising”.

“Affordable, not to mention suitable, housing is needed across the board — something which our industry is all too aware of.

“The government manifesto promised to build 300,000 homes a year [by the mid-2020s].” 

According to Vikki, such construction needed to account for “all types of homeowners”, including first-time buyers, second-steppers and the ageing population.

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