Despite being delivered in a pressurized, Brexitian climate, in his Autumn Budget, the Chancellor Philip Hammond managed to deliver some notable good news to the masses and, particularly, the property sector. Here’s what the Autumn Budget means for property and sustainability:
As part of his plan to ‘build a Britain fit for the future’, Hammond has placed a central focus on housing and encouraging development and enterprise, while acknowledging the need for cleaner air and energy.
Here are the relevant key points, with commentary from Verto Homes Co-founders Richard Pearce and Tom Carr.
Eliminating stamp duty for first-time buyers on properties of up to £300k
The headline all the newspapers have been lapping up, it’s an irresistible coup for young people who may have previously shelved plans of house ownership.
For a first-time buyer buying a house that costs £500k, this means that the stamp duty will fall from £15k to £10k, and for first-time buyers buying a house that costs £300k the stamp duty will be nil.
It’s an impressive piece of action as part of Hammond’s pledge to ‘revive the home-owning dream’.
As an additional measure to help homebuyers, the government is extending the help-to-buy scheme with a further £10bn investment, as announced last month. This means another 135k people could be assisted with buying homes by 2021 – allowing homebuyers to put just a 5% deposit down on a property, assisted by an equity loan from the government of 20% fee-free for the first five years.
And, in the budget, Hammond also signals a gift for both landlords and renters, as he promises tax breaks on long-term and secure tenancy agreements.
VH View: ‘It’s long overdue and should be a permanent feature. If first-time buyers stop then it all stops. So steps like this are vital for creating liquidity in the market – without which, the market gradually crumbles.’
Investing £44bn to help build 300k homes per year by mid-2020s
In a bid to tackle the housing crisis, Hammond has increased the number of new homes pledged: from 217k per year in the last budget to 300k per year, on average. To aid this, the £44bn allocated will go towards funding, loans and guarantees over the next five years.
VH View: ‘We have a housing deficit of 1m homes in the UK, so this is a step in the right direction but is by no means a holistic solution.’
‘House builders face big challenges: land is extremely expensive, due to demand, and we face outrageously slow processes from local authorities. However, what this government is signalling is that it is time to help our industry get building, and this we appreciate. It’s time for change, and we’re ready for it.’
Backing for independent builders
Hammond’s budget also gives a significant leg-up to small, independent house builders. Within the above allocation, £1.5bn will go towards the Home Building Fund and £630m will go to small sites development. This means an increase in supply, financing and productivity for small builders who are often squeezed by the big guys.
VH View: ‘This is great news, but we believe this budget should be increased even further. As independent housebuilders, we are facing a monopoly of a handful of major housebuilders who control 90% of the land. Without the urgency to get a return on investment, these developments stall and end up as empty plots.’
‘Small house builders, on the other hand, urgently need returns on their investments, so are committed and speedy with their builds. A healthy economy requires competition, and this is what initiatives like this encourage.’
EIS limit doubled: from £1m to £2m per investor
To further incentivise investment in early stage enterprises, the government has doubled the investment limit on the Enterprise Investment Scheme for knowledge-intensive companies. The scheme gives significant tax breaks to investors: totalling a maximum of £300k previously, and now set at £600k from April 2018.
VH View: ‘EIS is designed to give investors confidence in innovating, young companies which challenge the status quo. So this development will put fresh energy into enterprising businesses that drive progress, and, for property developers like us, will serve as a strong motivator for our investors.’
£400m infrastructure funding for electric vehicles
Hammond’s measures match his statement that the future of cars is “electric first”: with a £400m charging infrastructure fund, an extra £100 million for a Plug-In-Car Grant, and another £40 million in charging R&D.
Additionally, Hammond has ensured that those driving electric cars to work will not face taxes, while diesel cars will see a small tax increase.
The Chancellor also gives a firm nod in the direction of driverless cars – announcing that the government will amend road laws according to the technology by 2021.
VH View: ‘We have long been advocates of electric vehicles, so infrastructure to reinforce this is a big boost. Any initiative that can drag us out of the dark ages and into a greener, brighter future is welcomed by us.’