12 March 2020

Budget 2020: the key issues for housing

Coronavirus – and measures to deal with it – took up much of the focus of the Budget. However, new Chancellor Rishi Sunak did find time to address housing, making additional funding available for the removal of unsafe cladding on buildings, new affordable homes and tackling homelessness.

There was also the announcement of a 2 per cent stamp duty surcharge on non-UK property buyers, although this will not be introduced until April next year. The money raised from this extra tax will go towards funding 6,000 new homes for the homeless. There was speculation as to why it was not introduced straight away as is often the case with such measures, with the uncertainty surrounding coronavirus possibly accounting for the delayed introduction of the surcharge. It may also account for the fact that the government settled on a 2 per cent surcharge, not the 3 per cent that had been trailed in the Conservative party manifesto. While critics are concerned it could adversely affect the prime London market, it brings the capital into line with many cities with global property markets who already have similar levies.

Thankfully, a mansion tax on the country’s most expensive homes, was not mentioned. There was no further attack on landlords either; just as well, as they are already trying to come to terms with the reduction in mortgage interest tax relief, a stamp duty surcharge of their own and other regulatory changes.

While there were no measures aimed specifically at first-time buyers, the Bank of England’s announcement earlier in the day to cut interest rates from 0.75 to 0.25 per cent, will be welcomed by borrowers. Although mortgages are already very cheap, there will be pressure on lenders to reduce them further, even though margins are already slender.