Market stakeholders are not happy
The government has reiterated its commitment to enhancing housing opportunities across various generations, but property industry members are evidently disappointed.
Delivering the Spring Budget in Parliament on Wednesday, Chancellor Jeremy Hunt (pictured) said the government is on course to complete over one million houses within the current parliamentary term.
Hunt said financial allocations amounting to £188 million were designated for development projects in Sheffield, Blackpool, and Liverpool. Further expanding on the initiatives, he also revealed an additional investment of £242 million in Barking Riverside and Canary Wharf, which is expected to result in the construction of nearly 8,000 homes.
In a move to address issues in the housing market, the chancellor also declared the abolition of the furnished holiday lettings regime, aiming to discourage the preference of letting properties to holidaymakers over long-term tenants by second homeowners.
This change, Hunt said, seeks to make it less financially attractive to offer properties for short-term holiday lets, thereby potentially increasing the availability of long-term rental options.
Moreover, Hunt announced the termination of stamp duty relief for individuals purchasing multiple dwellings in response to the reported frequent misuse of the policy. He also declared the reduction of the higher rate of property capital gains tax (CGT) from 28% to 24%, saying it could increase government revenues as there will be more transactions.
Discover all the housing and property announcements from Chancellor Jeremy Hunt in the Spring Budget 2024. Find out what this means for London homeowners, renters, and first-time buyers via Evening Standard Homes & Property: https://t.co/U6ujRTihNa #RealEstate #realestatemarket…
— Nick Millican (@Nick_L_Millican) March 6, 2024
Despite these efforts, property market stakeholders expressed their disappointment over the lack of announcements related to the market in the Spring Budget.
“In his attempts to woo voters before the upcoming election, the chancellor missed a trick by not bringing forward more meaningful, positive policies for the property market,” Paresh Raja, chief executive at Market Financial Solutions. “But we knew that was likely to be the case.”
Richard Donnell, executive director at Zoopla, echoed Raja’s sentiment, saying that “the budget marks another missed opportunity to take action on boosting supply and mortgage availability in the housing market.”
“Housing will inevitability be a key battleground in the upcoming election, so a flagship policy to turbocharge the market’s recovery was conspicuous by its absence from this budget,” said Joe Pepper, chief executive officer at PEXA UK. “Reducing capital gains tax and tinkering with tax reliefs for second homes may stimulate some activity at the margins, but it won’t move the dial meaningfully.”
“Cutting property CGT rates will be welcomed in some quarters,” Raja added. “But elsewhere, after years of tightening regulation in the buy-to-let market, the government has indeed now moved to put the squeeze on holiday lets.
“Ensuring there are ample properties available for local homebuyers in tourist hotspots makes sense, but it is regrettable that the solution is always to target investors and penalise landlords rather than boosting supply through greater investment into housebuilding.”
Henry Jordan, director of home at Nationwide Building Society, said that, as an organisation, the lender was also disappointed that the chancellor had not announced any substantial measures to support first-time buyers in the Spring Budget.
“Nationwide continues to call for a government-commissioned, independently-chaired review of the first-time buyer market – this is needed to help government produce a sustainable long-term strategy to support people hoping to purchase a property,” Jordan added.
Yann Murciano, chief executive at development finance lender Blend, said they were also frustrated to see the government miss a golden opportunity to introduce measures that tackle the supply side of the property market.
“Failure to support the supply of housing with well-targeted tax incentives will risk further deepening the affordability gap,” Murciano pointed out. “With a raging housing crisis, it was disappointing to see the government ignore the critical issue of housing and instead focus on less relevant themes such as freezing the alcohol duty.”
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