Rishi Sunak’s debut Budget decisively tackled the COVID-19 outbreak, countering with a £30bn fiscal stimulus to support businesses and public services.
In the first of two Budgets in 2020 the agenda contained little about housing. From 1 April 2021 non-resident buyers of homes in England and Northern Ireland will have to pay a 2% Stamp Duty Land Tax surcharge. This measure is expected to affect 70,000 of the UK’s total 1.2 million annual property transactions.
Additional housing measures include:
- An extension of the affordable homes programme (£12.2bn funding)
- 1% cut for local authorities in interest rates for social housing
- £1.1bn allocation from the Housing Infrastructure Fund to build 70,000 new homes in high-demand areas
- Funding to remove unsafe cladding
- In all, over £600bn is to be spent on roads, rail, broadband and housing by the middle of 2025.
On Budget day, the Bank of England announced an emergency cut in its base rate from 0.75% to 0.25%, returning it to its lowest level in history: ‘to help UK businesses and households manage through an economic shock that could prove sharp and large but should be temporary.‘ A further cut to 0.1% was announced on 19 March. Positive news for home buyers, those looking to remortgage and those on base rate tracker or variable rate mortgages. The large number of homeowners who have already taken advantage of lower lending rates to secure a fixed mortgage will not benefit. Also, many aspiring first-time buyers saving for a deposit may initially suffer downside from the base rate move, as banks and building societies may opt to cut their savings rates.
Some housing industry commentators have expressed disappointment that there were no initiatives announced to help first-time buyers, replace Help to Buy, or measures proposed to reform Stamp Duty.