Experts have shared their disappointment in his Budget speech today that the Chancellor has not made major commitments to building more homes.
Richard Donnell, director of Zoopla, says Jeremy Hunt’s spring budget marks “another missed opportunity to take action to increase supply”.
“The consensus is that the country needs more new homes.
“There is a need for a major reform of the planning system to boost supply.
“More funding is needed for social and affordable housing, and investment in housing infrastructure to unlock supply.”
Donnell also expressed regret that no measures had been taken to support the emergence of fixed long-term interest rates in the mortgage market, which he believes are urgently needed.
He criticized the government for not making the £625,000 threshold for first-time buyer stamp duty relief permanent.
If he doesn’t do this, he says, “30% more first-time buyers will have to pay full stamp duty from March next year”.
Kate Davies, executive director of the Intermediary Mortgage Lenders Association, was unimpressed by the chancellor’s decision to cut property capital gains tax for higher rate taxpayers selling homes.
She says the change is “little more than a sop for landlords who have been forced out of the private rental sector by difficult economic conditions and a punitive tax system” and “not even much of a sop, given that the tax-free allowance for CGT will drop from £6,000 to £3,000 on January 1, 2025.”
Instead, she would have preferred to see a reduction in the 3% stamp duty surcharge on second and subsequent property purchases.
Davies said: “Given the dramatic imbalance between supply and demand in the private rental sector, which has seen rents rise to record levels, an incentive to encourage landlords to invest in more homes and increase supply would have been very welcome.”
She claims that the elimination of the multi-dwelling exemption in today’s speech does the opposite.
Davies added: “Jeremy Hunt openly admits that this relief was intended to encourage investment in the private rental sector, and government figures estimate that MDR was worth £730 million to investors between 2016 and 2022.
“The removal of this incentive is a surprising blow, at a time when the sector urgently needs support.”
Kersten Muller, director and real estate tax expert of Alvarez & Marsal, says about the abolition of the exemption for furnished holiday homes:
“The question is whether this will increase the supply of affordable rental housing – housing that is used by people – as this is what is needed.
She highlights concerns that the changes could push up rents across the market, including for longer-term tenants. She added: “The abolition of the multi-residential exemption was largely announced as an anti-avoidance measure.
“While this is understandable, removing that exemption could again increase costs for owners of residential investment properties as these are passed on to occupiers.”
Joe Pepper, CEO of PEXA UK, summarizes today’s announcements, saying: “Housing will inevitably be a key battleground in the upcoming election, so a flagship policy to boost the market recovery has been conspicuous by its absence in this budget.
“Cutting capital gains taxes and tinkering with second home tax credits may stimulate some activity at the margins, but won’t meaningfully move the dial.
“Not only did we need measures to increase affordability and stimulate transactions in a market characterized by economic uncertainty and high interest rates, we also urgently needed commitment to help drive reforms in the infrastructure that supports them.
“Without investing in long-term solutions, the government, incumbent or otherwise, will see a lower return on its investment in the housing market – and a missed opportunity to boost UK productivity.”