UK Budget 2020: A two-minute budget round-up
In this two-minute read, we look at what today’s budget announcements mean for the property sector.
The new Chancellor Rishi Sunak announced his budget this afternoon. But the main news relating to property came more than five hours before when the Bank of England (BoE) announced an emergency cut in interest rates to bolster the economy in the ongoing fallout of the coronavirus outbreak. The BoE reduced rates from 0.75% to 0.25%, taking borrowing costs back down to the lowest level in history.
This drastic move should promote mortgage lending and make it cheaper and easier to get a mortgage. This could help maintain the positive momentum in the housing market since the election in December. The flip side is it is almost pointless saving money in a bank, which is more than likely what the cut is designed to do. To get people spending and investing, rather than saving.
Back to the Budget
The budget’s key focus was quite rightly trying to protect the people of the UK against the health and financial impact of the Coronavirus with a £30billion fund to fight the disease and its fallout.
Domestic residential landlords: there was very little to get excited about. It contained nothing of note that was directly linked to them or the lettings industry. But there could be an opportunity further down the line thanks to the change below.
Non-resident buyers: The only stamp duty measure is a two per cent surcharge on the purchase of UK investment properties by non-resident overseas buyers. This is set to begin in April 2021 and intends to bring the UK into line with other global property markets.
The consequences of the introduced surcharge are not that clear though. If the tax deters overseas investors, it could reduce competition for domestic landlords who could then invest in providing more homes for a growing number of tenants. However, as suggested by Mark Hayward, chief executive of NAEA Propertymark, since prime central London is unaffordable to most homebuyers anyway, this move will not help those that need it most. The same is likely to happen in other England’s major cities and one of the unintended consequences may be a shortage of rental homes in the long-term.
New homes: A £400m fund will be made available to the eight Metro mayors to help build new homes on brownfield sites, while to help local authorities, interest rates on lending for social housing will be cut by 1%.
Commercial property: Business rates abolished for thousands of small firms for the next year is part of a package of “extraordinary” measures to deal with the economic fallout from the coronavirus. The measure applies to commercial properties with a rateable value of less than £51,000 and could save each business up to £25,000, Rishi Sunak said. Taking into account the severe competition faced from online retailers and the long-lasting campaign for the system to be reformed it is a welcome decision.
Help for the homeless: An appreciated £650m commitment was made to provide more than 6000 places for homeless people and rough sleepers.
The Chancellor announced a freeze on the duties on fuel and alcoholic drinks including cider, whisky and beer. There was also £500m a year assigned to fixing 50 million potholes. So perhaps a smoother journey in the future is something worth raising a glass to?
To find out more information about what the budget could mean to your rental investments and the West London property market get in touch with us here at Citydeal Estates.
