by: Mary-Anne Bowring
Rishi Sunak’s announcement means for housing
A stamp duty surcharge for overseas buyers, planning reform and a fund to remove dangerous cladding were among housing-related measures announced in today's Budget. In a Budget that focused on mitigating the impact of coronavirus on the British economy, comparatively little was said about housing. However, Rishi Sunak's first Budget did include new taxes for overseas property buyers, funding to remove unsafe cladding, some spending on new homes delivery and money to tackle homelessness. The Chancellor, less than a month into the job, also trailed a White Paper that he promised would "bring the planning system into the twenty-first century". Out of the window — along with the former Chancellor — is Sajid Javid’s plan for a "mansion tax" on the country’s most expensive homes, as well as much mention of first-time buyers.
Stamp duty hike for overseas buyers An additional tax on overseas buyers of UK property was confirmed in today’s Budget. Non-resident buyers of homes in Britain will have to pay an additional two per cent stamp duty. The policy was trailed in the Conservative party manifesto, which promised to impose a three per cent surcharge on overseas buyers. Until now, non-resident buyers have been subject to the same stamp duty rules as buyers living in the UK, ranging from 0 per cent for properties costing less than £125,000 up to 12 per cent for homes over £1.5 million.
Many cities with global property markets already have similar levies in place. Tom Bill, head of London residential research at Knight Frank said: “The introduction of a surcharge for overseas buyers will bring the UK into line with many other global property markets.” The new surcharge for overseas buyers is expected to affect 70,000 of the UK’s total 1.2 million annual property transactions. Mary-Anne Bowring, group managing director at residential property consultancy Ringley, said:"The falling pound has made housing more affordable to overseas buyers, while domestic buyers have had to contend with stagnant wage growth and ultra-low interest rates pushing up prices and eating away at their ability to save." "An increase in stamp duty for overseas buyers will simply put things back to where they were before the Brexit vote and level the playing field for domestic buyers.
" The Chancellor said the money raised from this tax will be used to fund 6,000 new homes for homeless people. The surcharge will take effect from April 2021, leading to speculation that there could be a surge in overseas buyers before the deadline. Removing unsafe cladding Today's Budget 2020 confirms that there will be an additional £1 billion allocated for the removal of unsafe cladding from residential buildings taller than 18 metres.
The Government pledged £400 million in 2018 for the removal of Aluminium Composite Material (ACM) — the type used at Grenfell Tower in North Kensington — from social housing tower blocks, and last year an additional £200 million was allocated for the private sector. Yet more than two-and-a-half years after fire tore through the block killing 72 people, hundreds of buildings remain encased in the potentially unsafe cladding. Up to 450 buildings across the UK were clad in ACM at the time of the disaster in June 2017, and since then 127 towers have had cladding removed.
The rest remain clad in ACM. Over the past two years, it has been widely reported that ACM is not the full extent of the problem. Other materials are now thought to be potentially dangerous, and homeowners are struggling to get surveys to prove or disprove the safety of their building's cladding. Promising to go beyond dealing only with ACM, Chancellor Rishi Sunak today said that "the new £1 billion fund will "make sure that all unsafe combustible cladding will be removed from every private and social residential building above 18 metres”.
However, residents of homes in buildings that are less than 18 metres high but which still have potentially unsafe cladding, were ignored in today's announcement. Other materials widely used to embellish new buildings — such as timber, high-pressure laminate or plastics on walls — could all potentially be unsafe. "It is not just about dangerous cladding, it is about retrospectively tracing the physical construction of the building, and testing and how all the components and layers of the building act together," said Ringley's Mary-Anne Bowring. New homes building Chancellor Rishi Sunak has also used his first Budget statement to announce a new £12 billion multi-year extension of the Affordable Homes Programme (AHP).
This is a £3 billion boost to the current programme which was put in place in 2016 and is due to end next year. The funding, distributed by Homes England and the Greater London Authority, is used to support housing associations and to encourage developers to build new affordable housing. Funding of £1.1 billion has also been confirmed through the Housing Infrastructure Fund to open up 70,000 homes in areas of high demand across country.
The Housing Infrastructure Fund is a government capital grant programme which pays for projects that will help to deliver new homes. In London, every local authority is considered to be an area of high demand with affordability pressure. First-time buyers There'll be disappointment for first-time buyers who were expecting a raft of measures to help them onto the housing ladder to be introduced in this Budget. There was no mention of the Government's new First Homes scheme, which promises a 30 per cent discount for first-time buyers, ex-service personnel and key workers buying in their local area.
The initiative was announced by Housing Secretary Robert Jenrick in February and followed plans outlined in the Queen’s Speech on December 19, a week after the Conservatives secured a huge majority at the General Election. Jon Ostler, CEO of personal finance comparison site, finder.com said: "The ‘First Homes’ scheme and its potential 30 per cent reduction in asking prices for first-time buyers has been mentioned a few times by the Government, while there were also rumours that the stamp duty threshold for first-time buyers would be raised. "Neither have happened this time around and savers are also likely to be faced with lower savings rates after the base rate was cut to 0.25 per cent this morning."
Prudence Ivey, Meghann Murdok, Kristy Grey: Budget 2020: what Rishi Sunak’s announcement means for housing — from stamp duty hikes to cladding removal fund
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