As featured in The Negotiator on 15th March 2023 by Robyn Hall
The UK is expected to avoid a technical recession this year according to the Office for Budget Responsibility, Jeremy Hunt told the House of Commons this afternoon.
Delivering his first budget he also said inflation was forecast to fall to 2.9% by the end of 2023 with the pace of price rises set to slow.
Last November, the Office for Budget Responsibility predicted that the average inflation rate for 2023 would be 7.4%. It now expects 2.9% by the end of 2023.
But many housing campaigners will be disappointed by today’s budget, which swerved several burning issues including a raising of the Local Housing Rate for tenants on benefit, and a hoped-for U-turn on the lowering of the tax reliefs for landlords.
Hunt told the Commons he would do whatever was necessary to protect the economy.
He said: “In the autumn we took difficult decisions to deliver stability and sound money. Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked.
“The International Monetary Fund says our approach means the UK economy is on the right track.”
Hunt went on to confirm corporation tax would be rising to 25% from 19% but also pointed out that the UK has lower levels of business taxes than France, Germany, Italy or Japan and that only 10% of companies would pay the full rate.
The Chancellor also froze fuel duty for the next 12 months and from 12 August, duty on draught products in all UK pubswill be 11p lower than supermarkets. This could mean that interest rates have peaked and we will see more certainty entering the market.”
Dominic Agace, Chief Executive of Winkworth, says: “The Office for Budget Responsibility forecasts are the best news for property market, with 0.2% contraction compared to 1.4 % in November and inflation reducing to 2.9% by year end. This could mean that interest rates have peaked and we will see more certainty entering the market.
“That said, it is disappointing that we have seen no action to help supply in the rental market, addressing the housing supply shortage crisis or any indication of support to fulfil a previous manifesto pledge to hit 300,000 new homes per year. It is also unhelpful that we have seen no new successor to Help to Buy or social housing funding.”
Today’s announcements missed an opportunity for the UK’s housing stock.
Nick Leeming, Chairman of Jackson-Stops, says: “Today’s announcements missed an opportunity to tackle the climate conundrum in the long term for the UK’s housing stock. Homeowners want to play their part and make their homes more energy efficient but the cost of doing so and lack of clarity on what needs to be done is holding them back.
“The government’s target of reducing domestic energy usage by 15% by 2030 is ambitious and won’t be possible without a joined up effort from Government and the property industry alike. Introducing zero-rate VAT for building repairs on period property to encourage essential maintenance would be well received, going beyond just energy efficient materials as we know such upgrades cannot be done in isolation. Longer-term measures to ensure that our historic homes are protected, means making them fit for the future now.”
And he adds: “Now is also the time for the Government to consider how to make our existing housing market more liquid to support economic growth, as new housing delivery is in decline. Measures such as offering a tax break incentive for downsizers – or indeed right-sizers – to find a home that suits their changing lifestyle, would free up much needed housing stock at the middle and upper end of the market.”
This Budget was always going to be light in terms of tangible changes.
Shane Miller (pictured above) Co-Chief Executive of national property company Spring, says: “Given the fragile state of the economy at present, this Budget was always going to be light in terms of tangible changes.
“An overly expansive budget would lead to higher interest rates, as we saw very clearly last September, and the negative impact of a similar miss step now would outweigh the benefits for individuals and businesses alike. Therefore, we’re happy to see that at first glance this budget appears well balanced.
“The Budget is, however, another missed opportunity from the government to finally reform Stamp Duty Land Tax, the current structure of which is a disincentive to labour mobility and therefore an impediment to their levelling up agenda.
“For example, a simple one off exemption for ‘last time buyers’ would go some way to readdressing our housing balance while stimulating all tiers of the market.”
The government are continuing to let the timetable for Landlords slip.
Charlotte Harrison, Chief Executive of Home Financing at Skipton Building Society, says: “Whilst it’s encouraging that the UK Government is continuing to support UK households by extending the Energy Price Guarantee it is disappointing that they aren’t also focusing on longer-term cost-saving methods and greener housing.
“The Government are continuing to let the timetable for Landlords to ensure their properties are rated C and above slip.
“This oversight will mean tenants will continue to miss out on the opportunities to save money on their energy bills. Furthermore, the retrofitting and home improvement industries will not have the capacity to help landlords carry out all the work needed to meet the targets. This will result in the UK missing the opportunity to reduce its carbon footprint.”
It’s a budget that gives with one hand and takes with the other.
Andy Sommerville, Director at Search Acumen, says: ““For the property sector, it’s a budget that gives with one hand and takes with the other. Investment Zones provide the potential for deregulation and simplification of the planning system, which will be attractive to developers and a potential stimulus for local economies, while tax incentives will support the occupier market in these locations.
“The fact that economic estimates are proving more favourable than perhaps predicted six months ago, will also be encouraging for property investors who might now anticipate a swifter recovery of asset valuations than forecast. “
Marc Vlessing, CEO of Pocket Living says: “While we broadly welcome the support measures announced by the Chancellor to help stimulate economic growth and further mitigate the impact of the cost-of-living crisis, one area where the government does need to go much further on is the support for those aged 25-45 years old who feel increasingly locked out of the housing market.”
Read the full article on The Negotiator here