Chancellor Rishi Sunak delivered his first Budget in parliament yesterday amid growing concern of the impact of COVID-19 on the health of the public and the economy.
Earlier in the day, Mark Carney at the Bank of England had cut the base rate to 0.25 per cent, followed by several lenders announcing reduced mortgage rates.
Much of Sunak’s speech related to how the company would overcome the fallout of the virus that has dominated the media in recent weeks and it was a long wait before any mention of the housing and property market.
Finally, the chancellor announced that £12bn would be allocated to the next Affordable Homes Programme, including £650m to help rough sleepers move into permanent accommodation.
The chancellor also announced that non-UK residents who buy residential property in England and Northern Ireland will be hit with a new 2 per cent stamp duty surcharge from April 1, 2021 in a bid to ‘control house price inflation’ and support UK residents on the housing ladder.
With regards to cladding, a £1bn fund was unveiled to remove unsafe materials from high-rise blocks.
Below is the response of members of the mortgage and industry to the Budget news:
“There’s no doubt that this is a Budget designed to combat the threat of the coronavirus to the UK economy and therefore the support for businesses is most welcome. As the scale of the threat from the virus has grown in recent weeks, it never seemed likely that this would be a Budget overly focused on the housing and mortgage markets and this has been the case. The announcements on funding for more social housing, a Housing Infrastructure fund, and money to build on brownfield sites were already heavily trailed while stamp duty changes are limited to a 2 per cent surcharge for overseas non-residents purchasing property in the UK which will kick in next April. Given that additional property owners such as landlords already pay 3 per cent extra this might be seen as slightly unfair, however as a result we may see greater levels of activity from overseas purchasers particularly in popular areas like London between now and next April.
“However, this was a Budget, coupled with the Bank of England intervention today, very much focused on staving off a significant contraction in the British economy and, given what Mark Carney said today, we might expect rates to be cut even closer to the 0% floor if the impact of the coronavirus is deeper and more prolonged than we would all hope for. Clearly, at some point we might expect these cuts to slowly inch their way into mortgage product pricing, although rates are incredibly competitive at the moment anyway. Off the back of today, I would urge all advisory firms to be making full and clear contact with their existing client base in order to review their current mortgage situation and needs against what the market has to offer. Plus of course, client contact – even if it’s not face-to-face – could mean the provision of a greater degree of protection for clients’ finances and ensure they are in the best shape possible to move through this situation and to provide peace of mind in the longer term.”
Stonebridge chief executive Rob Clifford
“Disappointingly, today’s Budget does not bring new hope to first-time buyers. With the Help-to-Buy equity loan scheme set to end in 2023, and no replacement initiative in place, more still needs to be done for ‘could-be buyers’ to help them onto the property ladder. Whilst today’s Budget tackled current wider economic challenges, it’s key that the government prioritises bringing in measures to support this community over the next 12 months.”
“The Chancellor’s lack of plans to eradicate stamp duty tax for first-time buyers will be met by many with dismay. This tax is punitive for many would-be buyers, adding thousands of pounds onto the upfront cost of a home purchase. In the coming months, I hope to see an extensive government review of the current stamp duty rules for first-time buyers – and potentially even downsizers. This should help restore market activity, freeing up much needed housing stock, and helping more borrowers take their first steps on the housing ladder, without facing a wave of extra costs.”
TMA director of mortgage services David Copland
“There was a clear push from the Chancellor today to enable the delivery of more homes and this is something we fully support and are ready to play our part in. We’re particularly encouraged by the funding to drive forward the delivery of affordable homes across the whole country and believe the sector will welcome this.
“£12.2bn for the Affordable Housing Programme is a considerable commitment and I believe it reflects the government’s understanding of the importance of delivering choice and variety in the housing market as well as volume. If we’re to meet the diverse housing needs of people across the country, we need to provide homes in a range of tenures, including social and affordable rent and shared ownership, not just for open market sale. Today’s Budget was another welcome step in that direction.”
Aster Group chief executive Bjorn Howard
“The Government is undermining its own efforts to boost homeownership through its attacks on the private rented sector. By choking-off supply and making renting more expensive it is tenants who are hardest hit.
“Ministers need to wake up to the reality of the damage their tax measures are doing to the private rented sector and support landlords to provide the new homes for private rent we desperately need.”
The Residential Landlords Association and the National Landlords Association
“It’s no surprise in the circumstances surrounding today’s Budget that much-needed reform to stamp duty land tax has been parked for now, other than the planned surcharge for non-UK residents. It’s welcome to see confirmation that the extra funds this will deliver from April next year will go towards tackling rough sleeping across the country. In the meantime, it remains to be seen what impact the surcharge will have on buyer behaviour over the next 12 months, especially given the fragile state of the economy.
“The April 2016 stamp duty surcharge for landlords and second home buyers prompted a stampede of purchasers seeking to beat the deadline to grasp lower rates before they disappeared. This time around, the changes will affect a smaller demographic and it will be harder to isolate the impact at a time when the UK’s broader relationship with international partners is in flux. International interest in UK property has been on the rise since December’s election, and the looming surcharge may add to the incentive for overseas investors to pursue purchases sooner rather than later.
“Meanwhile, on the domestic front, any mortgage borrowers on tracker products linked to the Bank of England base rate will take heart from this morning’s rate cut in these uncertain times. Lenders will largely have already taken a potential rate cut into account, so while there may yet be downwards movement in product pricing in the weeks to come, it may not be as much as some customers would like or hope for.”
Private Finance mortgage consultant Chris Sykes
“Understandably, today’s Budget looked to address the current economic needs of the UK following the events of recent weeks.
“However, we shouldn’t lose sight of the fact that the government manifesto promised a review of alternatives to the Help-to-Buy scheme – something that is yet to be delivered. A new form of financial support is still needed to ensure future homeowners aren’t locked out of the market. This should keep the level of first-time buyer activity on the up, all the while reassuring this pool of borrowers that the government is backing them.
“What’s promising, however, is the investment the Chancellor’s pledged to pump into new housing stock. Affordable, not to mention suitable, housing is needed across the board – something which our industry is all too aware of. The government manifesto promised to build 300,000 homes a year. The construction of such needs to account for all types of homeowners, from first-time buyers and second-steppers, to the growing ageing population. It’s encouraging to see the government delivering on promises in this way, and I hope that a focus on homebuilding continues to be the case for Westminster over the next 12 months.”
Primis Mortgage Network proposition director Vikki Jefferies
