What will today’s Spring Statement have in store for the property market?

Posted on Wednesday, March 23, 2022

The chancellor Rishi Sunak is due to deliver his Spring Statement later today, which could include some surprise announcements ahead of the new tax year in April.

The Spring Statement is often used as an opportunity to provide an update on the health of the economy and launch consultations into possible future government plans.

But there is mounting pressure on the government to provide greater help for households, amid the cost-of-living crisis.

But what can we expect from the Spring Statement when it comes to housing?

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “More balance in the housing market will help keep property prices in check; as we emerge from Covid restrictions, anything that encourages new supply is helpful, particularly that of affordable housing to buy or to rent.

“What is happening in the sales market is being mirrored in lettings – there is a shortage of stock, so rents and prices are going up, and it’s important not to lose anymore landlords. We don’t want to see further deterrents for landlords because as we have already witnessed, this accelerates the selling up of properties, negatively impacts supply and means higher rents.

“Some assistance to help ease the backlog in the courts system in terms of possession and anti-social behaviour would be welcome. We want to look after and support Generation Rent but equally landlords need to be able to remove difficult tenants.

“Some resolution of the cladding crisis would help release more properties onto the market, as owners who wish to move can finally sell up. These are so often the more affordable properties, particularly flats, which appeal to first-time buyers.

“Stricter anti-money laundering rules would be a popular move but there are plenty of good rules out there which are not being enforced. We hear of so little action under the present regime.

“There is likely to be a focus on heat pumps, with subsidies almost certain but there is no point in doing this unless there is sufficient consumer buy-in and confidence in the product, which isn’t there at the moment. Consumers worry about the maintenance and servicing of heat pumps and there needs to be more confidence around their operation.”

Timothy Douglas, head of policy and campaigns at Propertymark, points out that the Spring Statement is a good platform for the launch of a number of consultations.

He highlights key issues facing the housing market right now in both the sales and lettings market are supply, affordability and energy efficiency. There are a number of ways in which taxes can be used by the UK government to ease these issues.

Douglas said: “In the sales market the SDLT thresholds are outdated and should to be reviewed in line with house price changes. In the lettings market landlords are feeling the weight of tax changes through recent years and this also needs a re-think. For renters affordability is an issue, especially for those in receipt of Universal Credit. LHA rates just aren’t keeping up with market rents and the payments to tenants are designed completely at odds with how the private market works.

“In 2021 energy efficiency was huge on the agenda across all housing, sales, rentals and commercial. To make changes feasible financial help needs to be introduced. Cutting VAT on green home improvements would not only help people to reduce emissions in their everyday lives but also give a boost to businesses and help the property sector meet the impending new energy efficiency standards.”

Meanwhile, The British Property Federation (BPF) has set out policy asks ahead of Spring Statement to create what it describes as, ‘a greener, fairer and more affordable future’.

The BPF is calling on the chancellor to use today’s Spring Statement to take action to support the government’s ambitions to level-up the country, decarbonise the economy and ease the cost-of-living crisis being felt by millions.

The BPF has highlighted three key actions:

A greener, decarbonised future

Removing VAT on repairs and maintenance of residential buildings, to ensure that tax is not a blocker to anyone wanting to improve the energy efficiency of their own home.

Using capital allowances to expedite tax relief on retrofitting and energy efficiency improvement works.

Thriving town centres

Accelerating the renewal of our high streets through Town Centre Investment Zones.

Forging ahead with business rates reform by increasing the frequency of revaluations, extending empty rates relief and abolishing downward rates phasing.

Housing the nation

Stimulating institutional investment into affordable housing.

Temporarily halting all council tax revaluations of Houses in Multiple Occupation.

Melanie Leech, chief executive of the British Property Federation, commented: “The government has committed to reach net zero carbon by 2050 and to create a more economically balanced and socially just society.

“The real estate sector has a vital role to play in delivering on both these ambitions and we urge the chancellor to use the Spring Statement to accelerate investment and action.

“With the public and private sector working in partnership we can revitalise our high-streets and town centres and help both businesses and individuals to reduce their carbon footprint.”

Via @PropertyIndustryEye