Blink and you might have missed the smattering of housing measures announced in a Budget that promised so much and delivered so little.
Meaty housing announcements were notable by their absence in today’s Spring Budget, with Hunt going all in on a two percentage point National Insurance cut.
The Chancellor barely mentioned housing and there was no further spending commitment to boost supply. Nor was there the much-anticipated support for first-time buyers.
Neither was there an announcement on taxpayer-backed 99 per cent mortgages, changes to Lifetime ISAs (on either the early exit penalty or the maximum home value for first-time buyers). And we didn’t get a rabbit out of the hat on Stamp Duty thresholds.
Matt Smith, Rightmove’s mortgage expert summed up the mood from the mortgage industry. He said: “Despite mortgages being one of the defining topics of 2023, there is not one mention of the word in the 98-page Spring Budget.
“Whilst a 99% mortgage scheme was reportedly considered, it appears to have been scrapped and then no replacement found. More innovation is needed to help first-time buyers with smaller deposits, and those who are struggling to borrow enough to get onto the ladder.”
Instead, the Chancellor announced a few surprise housing policies, including a tax cut for landlords and second homeowners selling up.
The measures garnered a tepid welcome by some industry pundits, but were overall considered inadequate by many in the housing and mortgage markets.
What he did say
The Budget’s key announcements included the National Insurance cut, the fuel duty freeze and an increase in the child benefit threshold to £60,000.
On housing, it was short:
Scrapping tax relief on holiday lets – The Furnished Holiday Lettings tax regime will be abolished. The government said this will make the property tax system fairer and more efficient, as well as levelling the playing field between short-term and long-term lets, supporting people to live in their local area.
Ben Beadle, chief executive of the National Residential Landlords Association, said: “Increasing taxes on holiday lets and cuts to Capital Gains Tax will make no meaningful difference to the supply of long-term rental properties. Meanwhile, those reliant on housing benefits still do not know if their benefits will be frozen from next year or not.
“With an average of 11 tenants chasing every home for private rent, social housing waiting lists at 1.3 million, almost 110,000 households in temporary accommodation and the number of first-time buyers slumping, the Budget needed to tackle the housing crisis once and for all.
“What we got was a deafening silence.”
Stamp Duty tax relief scrapped – The Chancellor scrapped Stamp Duty relief for those who purchase more than one dwelling in a single transaction. This is known as Multiple Dwellings Relief, which he said has seen incorrect and abusive claims.
David Hannah, group chairman of Cornerstone Tax, said: “Multiple Dwellings Relief was first implemented as means to incentivise bulk purchases and provided developers with a suitable avenue for delivering low-cost homes.
“At a time when demand for affordable housing has skyrocketed, the government should look to create fresh incentives for developers, instead of abolishing old ones.”
CGT cut on residential property – Hunt is reducing the rate of Capital Gains Tax applying to residential property. Currently, CGT is applied at 28% on residential property at the higher rate, but for disposals from 6 April 2024, that rate of tax will fall to 24%. He aims to encourage landlords and second homeowners to sell their properties.
Richard Rowntree, managing director for mortgages at Paragon Bank welcomed the move CGT cut for landlords. He said: “This measure is intended to help to stimulate transactions while not negatively impacting net tax revenue.
“The move will hopefully increase fluidity within the property market, spanning both the owner-occupier and private rented sector, and mean more people will be incentivised to buy and sell properties in a way that best meets their needs and those of society more broadly.”
The three measures are expected to raise over £600 million a year in total in 2028-29, according to the Treasury.
What the experts said
Jonathan Bone, mortgage lead at Better.co.uk, said: “I had genuinely hoped the Chancellor would unveil proactive steps to facilitate home ownership. Yet, to my dismay, nothing was forthcoming. This leaves countless young individuals trapped in the exorbitantly expensive rental market, unable to break free and save for a deposit for their own property.”
Tim Bannister, Rightmove’s property expert agreed: “We had hoped the government would seize the opportunity to help first-time buyers and reform the outdated stamp duty system today, instead, home-movers are left with very little.
“There is a chance that the reduction in the higher rate of capital gains tax will mean some landlords to sell properties which could, in turn, increase choice for first-time buyers. Whilst any increase in supply for first-time buyers is welcome, we will have to wait to see how substantial it is, and it may also result in a further reduction in already-tight rental stock levels in the short term.”
