Early reaction from the industry has suggested frustration at what many see as Sunak missing an opportunity.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "This could be regarded as a reprieve for the housing industry as many feared they would be clobbered one way or another, whether that was through higher capital gains tax or other measures which would have an impact on activity. When you don’t see much of anything, it is effectively the Chancellor saying he is happy with the way the market is operating at the moment and doesn’t wish to rock the boat. More help with regards to energy efficiency would have been welcome considering this is such a big target for the government at the moment. Good EPC ratings are still not a high enough priority for aspiring or existing homeowners but tax breaks might increase energy efficiency and retro-fitting supported by green mortgages and more generous green homes grants. However, it's important to not reduce the value or saleability of older, unmodernised properties or discourage their improvement."
The director of London agency Benham and Reeves, Marc von Grundherr, comments: It's disappointing to see such a brief mention for the UK property market in today’s Budget. The Chancellor has chosen to give the sector a bit of the cold shoulder with just a handful of headline figures, clearly believing his job is done having fuelled house prices to record highs via the recent stamp duty holiday. We need more homes to satisfy our ever-growing appetite for homeownership and an insignificant level of brownfield development is more of a slap in the face than it is an outstretched hand. As for the £11.5 billion pledged for 180,000 affordable homes, it’s a start, but hardly news given it was announced by [former Housing Secretary] Robert Jenrick a year ago."
And the managing director of Midlands agency Barrows and Forrester, James Forrester, says: “Time and time again we’ve seen the government pledge to fix the housing market using recycled rhetoric and funding from previously announced initiatives. Today was no different and reading between the lines, we can expect to see them continue to over promise and under deliver in their attempts to address the housing crisis. While Boris Johnson might not be a fan of recycling, his chancellor certainly is and so the 180,000 new homes pledged today is certainly no step forward. The only bone thrown to a nation of ravenous homebuyers starved of housing stock has been a scrap of properties built on brownfield sites. According to the government there are some 36,000 hectares of brownfield land across England alone, enough to deliver over 1.3m new homes. So even if the government does make good on its promise, it’s just a fraction of what they could, and should, be building.”
Here's a summary of the Sunak's measures:
Property and related issues:
There will be £5 billion to remove unsafe cladding from highest risk residential buildings; this will be funded through a Residential Property Developers Tax levied on developers with profits over £25m at a rate of four per cent. Some 31 housebuilders made that much profit in 2019.
There will also be up to 180,000 affordable homes built on brownfield sites as part of a “multi-year housing settlement” of nearly £24 billion - the largest cash investment in a decade according to the Chancellor.
Some £11.5bn of these funds will go towards the construction of affordable homes, with the focus trained on developing brownfield sites.
Sunak told the Commons: “We are investing more in housing and homeownership with a multi-year settlement totalling nearly £24 billion. The government will provide £11.5 billion to build up to the 180,000 new, affordable homes the country needs annually, 20 per cent larger than the previous programme. We are investing an extra £1.8 billion, enough to bring 1,500 hectares of brownfield land into use, meet our commitment to invest £10 billion in new housing and unlock a million new homes.”
- By end of Parliament taxes will be going down not up;
- Taper reduced on Universal Credit to offset the £20 a week cut recently implemented.
- Business rate to be reformed "to create stronger High Streets" with revaluations every three years from 2023;
- Investment relief to encourage businesses to adopt energy-efficient measures;
- A new 50 per cent business rates discount for companies in the retail, hospitality, and leisure sectors, up to a maximum of £11,000, lasting for one year.
Jobs and Industry:
- 26 per cent rise over this Parliament for skills spending;
- 560m extra spending on improving numeracy skills.
Education and Culture:
- Extra £4.7 billion by 2024-5 but this will only see per-pupil funding to 2010 levels;
- This is on top of £14 billion announced in 2019.
- £850m for galleries, museums and libraries.
- Scheduled fuel duty increase cancelled for 12th year;
- Reduced air passenger duty for domestic flights within the UK;
- New tax for 'ultra-long-haul' international flights of up to £91;
- 50 local road upgrades as part of £5 billion road programme;
- Funding for buses, cycling and walking totalling more than £5 billion.
- "Radical simplification" of alcohol duty with 15 different rates reduced to six;
- The stronger the alcohol content, the higher the tax meaning some increases and some reductions.
- Inflation, currently 3.1 per cent, set to rise to 4.0 per cent over the next year;
- Supply chain pressures "will take months to ease" as these are "shared global problerms";
- Office for Budget Responsibility revises upwards its growth forecast - economy should grow 6.0 per cent in 2021;
- OBR says unemployment will peak at around 5.2 per cent, which is lower than previously expected;
- Wages have grown 3.5 per cent in real terms since February 2020.
New Fiscal Rules:
- Underlying public sector net debt should be falling as a percentage of GDP; and
- In normal times the state should only borrow to invest. That means everyday spending must be paid through taxation, he says.