Given that the main purpose of the Chancellor’s budget day task is actually to balance the books, it’s perhaps not surprising that in monetary terms, there’s rarely much that could be said to be dramatic change. It usually involves some tinkering around the edges, possibly with a few linked general policies around a particular theme. Roland Finch has a look at what’s in the headlines this time round ...
Given that the main purpose of the Chancellor’s budget day task is actually to balance the books, it’s perhaps not surprising that in monetary terms, there’s rarely much that could be said to be dramatic change. It usually involves some tinkering around the edges, possibly with a few linked general policies around a particular theme. Roland Finch has a look at what’s in the headlines this time round ...
Another year, another budget...
In reality, there are one or two measures that directly affect our industry and another couple of areas where opportunities have probably been missed, so let’s have a look at some of the main points.
... there remains criticism from some quarters that it is simply fuelling a housing ‘bubble’ ...
Availability of funds
‘Help to Buy’ equity loan scheme extended to 2020 with an aim of providing 120,000 new homes, and mortgage guarantee scheme extended to 2016.
In principle this sounds like a good thing. It was also announced before the budget, and applies only to ‘new build’ properties.
However, there remains criticism from some quarters that it is simply fuelling a housing ‘bubble’, while the target still falls some way short of the Government’s own projections of a need for between 230,000 and 250,000 homes over the same period.
New developments are planned for Barking and Brent Cross in London, while the creation of a new Garden City was announced for Ebbsfleet in Kent, together with a £200 million infrastructure fund to encourage development. The Government proposes to bring forward a strategy document on Garden Cities later in the year to explain how local authorities could bring forward their own plans for locally-led proposals.
A £150 million fund was announced to assist self-builders in a ‘right to build’ scheme, by way of a serviced plots loan fund and consultation to give self-builders a right to buy a plot from their local authority.
Plans were announced to spend £140 million on flood support measures and £200 million for local authorities to assist in repairing potholes.
The Government has provided a £270 million guarantee for the Mersey Gateway Bridge project, a six lane toll bridge between Widnes and Runcorn, as well as allowing the Welsh Assembly the power to raise revenue through taxation to help fund other infrastructure projects.
In a significant change to the pension arrangements, the requirement to purchase an annuity from pension contributions was abolished.
Taxation and other measures
As well as direct help to particular projects the Chancellor announced some more general measures:
Stamp duty remains unchanged for individuals (although it has been increased for residential properties held in corporate portfolios). For businesses, corporation tax has been reduced and business rate discounts in enterprise zones have been extended.
In a significant change to the pension arrangements, the requirement to purchase an annuity from pension contributions was abolished. This means that pensioners have more flexibility on where to invest their money, and it is possible that some of it may come into the construction arena, either as an investment or, as some commentators predicted, by way of impulse buying as people alter or maintain their own homes, or more likely by using the funds to finance ‘buy to let’, or helping children or grandchildren onto the property ladder.
Carbon price support has been capped at £18 per ton of CO2 from 2016-17.
Many organisations called for this controversial ‘green’ tax – previously the climate change levy – to be abolished altogether. However, a freeze is a move in the right direction.
It will be interesting to see what happens if Scotland does vote for independence ...
What else?
There are a number of things the Chancellor didn’t do, and hasn’t done in previous years either. One of these is to stimulate the repair and refurbishment market by the use of measures such as VAT or other taxation. Many commentators over the years have called for a reduced rate of VAT on this type of work, but it seems that the treasury doesn’t agree, and doesn’t see changes to the taxation system generally as being the way to encourage markets.
So, in summary: a cautious welcome from the industry. There are still some imponderables to resolve, like where exactly the quarter of a million homes will be built, and whether they will actually be affordable, but a step in the right direction, nonetheless.
