Experts have shared their disappointment that the Chancellor made no major commitments to build more homes in his Budget speech today.
Zoopla executive director Richard Donnell says Jeremy Hunt’s Spring Budget “marks another missed opportunity to take action on boosting supply”.
“The consensus is that the country needs more new homes.
“There is a need for widespread reform of the planning system to encourage supply.
“More funding is needed for social and affordable homes, and housing infrastructure investment to unlock supply.”
Donnell also expressed regret that there were no measures to support the emergence of long-term fixed rates in the mortgage market, which he says are urgently needed.
He criticised the Government for not making the £625,000 threshold for first-time buyer stamp duty relief permanent.
As a result of not doing so, he says, “30% more first-time buyers will be liable to pay full stamp duty from March next year”.
Intermediary Mortgage Lenders Association executive director Kate Davies was unimpressed by the Chancellor’s move to reduce capital gains tax rate on property for higher rate taxpayers selling residential property.
She says the change is “little more than a sop to those landlords forced to exit the private rental sector by tough economic conditions and a punitive taxation system” and “not even much of a sop, given that the tax-free allowance for CGT is set to decrease from £6,000 to £3,000 on January 1, 2025.”
Instead she would have preferred to see a cut to the 3% Stamp Duty surcharge on second and subsequent property purchases.
Davies says: “Given the dramatic imbalance between supply and demand in the private rental sector, which has pushed rents to record levels, an incentive to encourage landlords to invest in more properties and increase supply would have been very welcome.”
She claims that the abolition of multiple dwellings relief in today’s speech does the opposite.
Davies adds: “Jeremy Hunt freely admits this relief was aimed at encouraging investment in the Private Rental Sector, and government figures estimate that MDR was worth £730m to investors between 2016 and 2022.
“Scrapping this incentive is a surprising blow, at a time when the sector desperately needs support.”
On the removal of relief for furnished holiday lets, Alvarez & Marsal managing director and property tax expert Kersten Muller says:
“There is a question as to whether this will increase supply of affordable rental properties – those used as homes by people – as this is what is needed.
She highlights concerns that the changes could push up rents across the market, including for longer-term tenants.She adds: “The removal of the multiple dwellings relief was announced largely as an anti-avoidance measure.
“Whilst this is understandable, the removal of that relief can again increase costs for owners of residential investment properties with these being passed on to occupiers.”
Summing up today’s announcements, PEXA UK chief executive Joe Pepper says: “Housing will inevitably be a key battleground in the upcoming election, so a flagship policy to turbocharge the market’s recovery was conspicuous by its absence from this Budget.
“Reducing capital gains tax, and tinkering with tax reliefs for second homes may stimulate some activity at the margins, but it won’t move the dial meaningfully.
“Not only did we need measures to boost affordability and drive transactions in a market characterised by economic uncertainty and high rates, we also desperately needed to see commitment to helping reform in the infrastructure that supports it.
“Without investing in any long-term fixes, the government, incumbent or otherwise, will see reduced returns on its housing market investment – and a lost opportunity to boost UK productivity.”
