In today’s Spring Budget is was announced that there are plans to spend £1bn on twelve new investment zones to reduce regional disparities and to boost the levelling-up scheme. Each zone will receive £80M in government support over five years whereby the money could be used for tax incentives including a relief on stamp duty, business rates or local infrastructure. This is set to encourage development projects, benefit property values and stimulate activity in these areas.
There will be an extension to the £2,500 energy price cap until the end of June, saving the average household a further £160 on top of the energy support measures already in place, while announcing that households on pre-payment meters will not pay more than those on direct debit.
No measures were outlined to support the two million private renters who rely on housing benefits or universal credit to cover property costs.
Andy Jones, Director of Corporate and BTR, Leaders Romans Group:
“Many developers feel that potential is limited by prohibitive debt financing, out of control materials costs, high stamp duty, excessive Capital Gains Tax for international buyers, increased mortgage rates and an absence of mortgage interest tax relief is putting off the retention and flow of BTL landlords, in the sector.
To compete for the international finance that is needed to fund large scale projects the Budget could have waived the 2% surcharge payable by overseas investors, it could have introduced tax relief to counter excessive cost rises, reduced stamp duty and reintroduced mortgage interest tax relief.
Furthermore, there is a strong likelihood that the looming EPC changes – specifically the proposed upgrade to C rating for all new lets by 2025 – will have to be kicked down the road too. But this must be confirmed before we get to the edge of the precipice to avoid scaring off the private landlords that we desperately need to maintain a competitive private rented sector.
The UK should be one of the best places in which to invest, due to the language, time zone, and talent pool but the Budget does little to support this”.
Simon Bath, CEO of IPlace Global:
“Today’s budget announcement will provide some welcome relief for families across the UK with support in areas such as childcare, energy costs and fuel duty – these measures will at least give households a bit more breathing room.
“The creation of the twelve investment zones as part of the levelling up agenda will undoubtedly have a positive effect on the property market in those areas. Hunt’s plan to reduce regional disparities could not only encourage builders to accelerate development projects, but also help stimulate activity within the housing market to revive waning demand. Over the next few years we could start seeing this have a material effect on Britain’s long-standing supply and demand issue.
“One of the key factors missing from today’s budget was the targeted efforts in supporting rental sector, particularly around increasing housing allowances in line with inflation, which despite the Bank of England’s ten consecutive rate rises, is still persisting. Soaring rental costs have been catalysed by the fact that landlords are needing to hike up prices to keep up with inflationary pressures and now what we’re seeing is an increase in the number of renters who are on housing benefits or universal credit who are still being required to cover the shortfalls.
“Landlords are beginning to let go of their buy-to-lets as a result of higher maintenance costs, meaning that the rental market is slowly drying up. However, hopefully from what the government has announced, we’ll be able to see more people incentivised to invest in a property as it could somewhat alleviate the current rental and housing stock shortage”.
Nick Sanderson, CEO at Audley Group:
“Another opportunity for housing reform has sailed on by. An innovative Chancellor would have used his time at the dispatch box to set out reforms that place as much emphasis on later living as first-time buyers. It was unrealistic to expect a stamp duty holiday in the current economic climate, but Jeremy Hunt Chancellor should have considered stamp duty reform. In its current guise it’s a brake to the whole market, which in the long term costs the Treasury more. If there is no fluidity, people stay in family homes that are too big and unsuitable for them. Unsuitable housing leads in turn to more pressure on a stretched NHS compared to a pre-emptive move to a property that can adapt as people age. And yet more housing is needed for first time buyers at a time when there is already a serious deficit.
In contrast there is a desperate need to increase the provision of age specific housing in the UK, but the sector has been largely ignored by successive chancellors. There is little time to waste. The groundwork must start now, if we are to see any benefit in the next few years”.
Brendan Geraghty, Chief Executive Officer, UKAA:
“The Build to Rent sector has a key role to play in addressing the housing shortage in the UK delivering affordable, high quality, secure accommodation for those whose access to home ownership is limited and helping to accelerate housing delivery. The growth of the sector is dependent on continuing to attract capital investment. However, the biggest obstacle to delivering these homes is the planning system.
The on-going delays to planning exacerbated by changed to the NPPF has led to 50 local authorities pausing or reducing local housing development plans. This is leading to delays and uncertainty for investment in Build to Rent.
It is also disappointing that the Spring Budget does not address the issues impacting supply of much-needed high quality homes for rent. Since 2019 a total of 70,000 buy-to-let landlords have left the housing market, representing a loss of 116,000 properties.”
It is encouraging that focus continues on Levelling Up, with the announcement of 12 investment zones. Build to Rent is central to regeneration and meeting housing need in key regional cities. The UKAA is supporting this approach by establishing regional hubs to focus on BTR delivery in these regions, with hubs already active in Scotland and the North West of England, with more coming in the Midlands and North East”.
Charlotte Harrison, CEO of Home Financing at Skipton Building Society:
“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.
Skipton is committed to playing its part and is re-investing its profits over the coming months and years into helping make Britain’s homes greener and is offering support and the tools to help landlords efficiently improve their rental properties.
Skipton are offering BTL customers a free EPC Plus on up to 10 of their properties, even if just one of those is mortgaged with Skipton. However, to help us tackle this huge societal issue and ensure we as a nation are not further delaying the greening of UK homes, we urge the Government to stick to its original timetable to upgrade minimum energy standards for rental properties and to provide better support to help landlords through this process”.
