Chancellor goes for growth but it’s ‘as you were’ for the housing sector

by Editorial Team
17th March 2023
Our News

Chancellor Jeremy Hunt has unveiled his 2023 Budget but there was little in it aimed specifically at the UK housing market.

The Private Rented Sector, in particular, was hoping for specific assistance in an effort to retain the number of landlords and increase the supply of homes.

And many commentators had called for cuts in Stamp Duty (especially for ‘Downsizers) to stimulate future house sales.

But Mr Hunt chose not to intervene in either case, deciding instead to concentrate on measures designed to tempt early retirees and parents back to work.

But while there was little gain, there was little pain either. He didn’t increase taxes on sales of investment property, nor did he add to the Stamp Duty premium – two measures which had been tipped as possible ways to raise revenue.

He did, however, announce two measures intended to help construction companies build more homes.

First, following an appeal by the Home Builders Federation, he announced that bricklayers, roofers, carpenters and plasterers can now be added to the Government’s list of skilled jobs that can be filled by foreign workers.

Planned increase

Second, there was a commitment contained in the Budget Report which was aimed at removing what the Government described as a ‘major barrier’ to housebuilding – mitigation measures to avoid pollution following building developments. Mr Hunt promised some support for mitigation projects via the Department for Levelling Up.

But that was all Mr Hunt was prepared to do directly for the housing market.

However, he did announce that the Office of Budget Responsibility (OBR) was now forecasting that inflation looks set to fall from 10.1% in January to 2.9% by the end of the year.

A return to more stable inflation figures (the Government’s target figure is 2%) will be welcome news to everyone – landlords, tenants, buyers, sellers alike. As will Mr Hunt’s reassurance that, despite fears to the contrary, the UK economy will not enter into a ‘technical recession’ in 2023.

This could add an unexpected sense of confidence in an already resilient market.

A three-month extension of the energy bill cap had been widely predicted. The Government had planned to cut subsidies to energy bills at the end of March, but in a policy reversal, Mr Hunt announced that the Energy Price Guarantee would continue until July – limiting energy bills for an average household to £2,500 per year – more good news for household budgets and hard-pressed families struggling with cost-of-living.

The Government’s planned increase in the main rate of Corporation Tax from 19% to 25% was confirmed but it was also announced that capital investments will be fully tax deductible for the next three years, at least.

And, as a continuation of the Government’s levelling up agenda, 12 new investment zones across the UK were announced with tax breaks and other benefits worth £80m each over the next five years.

But the main thrust of Mr Hunt’s fiscal plan was directed at stimulating growth by helping the ‘economically inactive’ back to work.

Childcare

The rising cost of childcare has long been considered a barrier to parents returning to work.

Working parents of three and four-year-old children are already entitled to 30 hours a week of free childcare in England.

The Chancellor announced a staged extension to the scheme with 15 free hours of childcare for two-year-olds in April 2024, and in September 2024 for those aged over nine months, then 30 hours for all from September 2025.

He also increased funding for school-age children to receive before and after-school care.

Getting more parents back to work – particularly Mums – could provide a welcome boost for the mortgage market.

Adrian Anderson, of mortgage broker Anderson Harris, said: “Childcare fees of potential borrowers are scrutinized by the banks and have a real impact on affordability capacity for those seeking mortgages. Childcare fees were making some families unmortgageable.”

People prepared to train as childminders are to receive a £600 incentive payment as Mr Hunt attempts to boost childcare staff numbers.

And turning his attention to people further up the age-scale, he announced a £63m ‘Returnerships’ programme for over-50s who may wish to go back to work in a different sector.

Pensions

In a bid to retain more doctors and consultants in the NHS, Mr Hunt abolished the tax-free limit on pension savings and although the annual allowance will remain in place, it was increased from £40,000 to £60,000.

Other measures included:

· A commitment to increase the Defence Budget by £11bn over the next five years

· £200m for councils to fix potholes

· £900m investment in the UK’s AI sector

· £10m additional funding over the next two years for charities working to prevent suicides

· A 12-month extension to the freeze on fuel duty

· Tax breaks for the entertainment industry

· The abolition of the work capability assessment, allowing disabled people to take a job without fear of losing their benefit.