We use cookies to give you the best possible experience on our website. If you continue without changing your settings, we'll assume that you're happy to receive all the cookies on our website. However, you can change your cookie settings at any time.

Your Privacy

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalised web experience.

Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

(Req)

These cookies are strictly necessary for the Website to work properly and for us to keep it secure. They are needed to allow users to use the Website and its features, including to move between pages of the website.

These cookies are required

Performance and analytical cookies

These cookies allow us to collect certain information about how a user navigates the Website. These cookies collect information that is used either in aggregate form to help us understand how our site is being used or how effective are marketing campaigns are, or to help us personalise our site for you. We use Google analytics and Bing 1st party cookies, Google Marketing Platform cookies and Hotjar cookies for reporting purposes.

Cookie Name Purpose More information
Google Marketing Platform Cookies _ide, _nid, _sid, _dsid, _flc, _aid, _taid These are 3rd party cookies served by Google Marketing Platform. They serve adverts to visitors based on the websites they've been to previously. Click here for more information about Google Marketing Platform and how to disable this cookie.
Facebook   Personalise and provide products via Facebook marketing. Click here for more information about Facebook cookies.
Flash Taking   These are 3rd party cookies served by Flash Taking. They serve adverts to visitors based on the websites they've been to previously. Click here for more information about Flash Taking and how to disable this cookie.
Google Analytics _utm(x), _ga(x), _gid, amp_token These cookies are used to collect information about how visitors use our website. They keep track of when a visitor enters and leaves the website and any search engines and keywords that are used, including any personal and/or sensitive data. Click here for more information about Google Analytics cookies.
Google Optimize _gaexp, _opt_awcid, _opt_awmid, _opt_awgid, _opt_awkid, _opt_utmc These cookies are used to target content variants to users as part of website experiments. Click here for more information about Google Optimize cookies.
Bing mui(x), _uet(x) Remarketing script and conversion tracking Click here for more information about Bings Ads and how to disable this cookie.
Hotjar _hj(x) These cookies are used to record anonymous videos about how visitors use our website. They keep track of how visitors engage with pages on our website. Click here for more information about Hotjar and how to disable this cookie.
ResponseTap   These are 3rd party cookies served by ResponseTap. They serve incoming phone numbers to visitors to allow call volume tracking. Click here for more information about Response Tap cookies.
The Trade Desk   These are 3rd party cookies served by The trade desk. They serve adverts to visitors based on the websites they've been to previously. Click here for more information about trade desk and how to disable this cookie.

Marketing cookies

These cookies are used to make advertising messages more relevant to you. We may use this data to tailor the marketing and ads you see on our own and other websites and mobile apps, including social media.

Together

Budget 2021: What it means for home buyers and property investors

Yesterday (March 3rd), Chancellor of the Exchequer Rishi Sunak outlined the Treasury’s Budget for the next financial year, with the COVID-19 pandemic continuing to dominate headlines.

As a result, Mr Sunak’s Budget speech unsurprisingly centred on how his department has been supporting, and will continue to support, British families and jobs.

Outlining the scale of the problem – a 10% economic contraction and the highest peacetime borrowing on record – it’s hardly surprising that Mr Sunak didn’t dwell too long on how it would all be paid for, for fear of putting the brakes on fragile business confidence. So he said now was “not the time” for firm targets, and made it clear it would take many governments – and many decades – to settle the debt.

He reiterated last week’s commitment from Prime Minster Boris Johnson towards the ‘cautious but irreversible roadmap’ out of lockdown, and announced with a smile that the Office for Budget Responsibility was predicting the economy would be back at its pre-pandemic levels by mid-2022.

Watching with interest, we’ve picked out some of the salient points of how our customers are likely to be affected.

First-time buyers

One of the bigger announcements is surely aimed at keeping the housing market buoyant, and was the promise of a Government-backed mortgage guarantee for lenders who provide 95% mortgages – with well-known high street brands already signed up to begin offering these next month. While not limited to first-time buyers (as far as we could tell), Mr Sunak stated his aim was to “turn Generation Rent into Generation Buy”, so it’s clearly aimed primarily at them.

There was no mention, however, of how lenders might be encouraged to modify their lending criteria to account for issues many Brits have faced over the last year – such as recent changes to employment, missed payments, and the like.

Together will continue to make common-sense decisions based on borrowers’ individual circumstances.

Self-employed

Many of our customers are self-employed, so there was good news for them in the form of two final payments through the Self-Employed Income Support Scheme. A welcome change to the scheme means a further 600,000 newly self-employed people may be able to claim, provided they have submitted a tax return.

Home movers

Since July last year, the Stamp Duty exemption for homebuyers has been extended from the first £125,000 of the purchase price to the first £500,000. This has proved very successful in stimulating the housing market, and this exemption was scheduled to end on March 31st.

As anticipated in some quarters, Mr Sunak announced an extension to this holiday to prevent transactions already in the pipeline from falling through. The current deadline of March 31st will be extended to June 30th, and beyond that a smaller exemption (up to the first £250,000) will apply until the end of September. The exemption should return to the normal £125,000 thereafter.

Business owners

Mr Sunak announced changes to Corporation Tax effective from April 2023, giving businesses time to prepare for new rates and ensure recovery and investment isn’t stifled in the short term.

The tax will become progressive, with higher profits attracting a higher rate – so smaller businesses making up to £50,000 will continue to attract the current 19% rate. Businesses making profits over £250,000 will pay a new 25% rate, with other businesses falling somewhere in the middle.

And because Corporation tax applies only to profits, unprofitable businesses are exempt from paying any tax by default.

Mr Sunak also announced that business rates relief for the hospitality, retail and leisure sectors will continue beyond the end of March, when it was due to expire, and instead end in June. For the remaining nine months of the tax year, these same businesses will receive reductions of up to two-thirds of their bill, subject to some limits.

Some commentators had expected Mr Sunak to set the scene for an online sales tax all retailers may have to pay, but prior to the Budget it was announced he has delayed a final report on a review of business rates – a key part of his promise to ‘level the playing field’ between the high street and online retailers – until later this year.

Mr Sunak announced a continuation of the reduced rate of VAT (currently 5%) for hospitality, holiday accommodation and attractions for a further six months over the busy summer period, and ending in September. An interim rate of 12.5% will then run from September until the end of March 2022, before returning to the full 20% rate.

Property developers

Mr Sunak did not make any reference to the cladding scandal in the Budget, but Housing Minister Robert Jenrick announced on 10th February the Government’s further plans to remove unsafe cladding by investing an additional £3.5 billion.

The Government will soon be consulting on a new policy known as ‘Gateway 2’, a levy that will apply to residential developers who seek permission to develop certain high-rise buildings in England.

A new tax will also be introduced for the UK residential property development sector in 2022, which is expected to raise at least £2bn over the next ten years to help pay for cladding remediation costs.

Landlords

A sigh of relief for landlords, who must have been happy to not be mentioned at all in Mr Sunak’s keynote speech. After several years of punitive change in taxation and regulation, it was all quiet.

Even a rumoured new 2% Stamp Duty levy for overseas buyers did not materialise.

Property investors

Capital Gains Tax is not covered by the Prime Minister and Chancellor’s so-called ‘triple lock’ tax freeze on income tax, national insurance and VAT, and before the Budget, Stefan Wagstyl for the Financial Times reported that “those with unrealised capital gains might be advised to cash in and take a tax hit now, as any future CGT changes will be in one direction – up.”

However, Mr Sunak instead announced a freeze on several tax thresholds and allowances – including inheritance tax and the personal Capital Gains Tax allowance – until April 2026.

Possibly even better news was Mr Sunak’s big ‘rabbit in the hat’ moment, which came with the announcement of the creation of a number of new Freeports.

This new UK-wide policy will also extend to Scotland and Wales, and Mr Sunak was able to announce the location of eight new Freeports in eight of the nine regions of England – following through on promises to rebalance investment towards smaller and (often impoverished) coastal communities.

These special economic zones have different rules that make it “easier and cheaper to do business”, and will encourage investment.

These are far from a new invention but Mr Sunak promised a “unique approach”, with simpler planning rules, infrastructure funding, cheaper customs with favourable tariffs or duties, and lower taxes to encourage building. All of this may mean they be worth investigating as possible ‘boom towns’.

These are, going clockwise:

  • Teesside (around Middlesbrough and Stockton-on-Tees), in the Northeast.
  • Humber (encompassing Hull and Grimsby) on the Yorkshire/East Midlands border.
  • Areas around East Midlands Airport, near to the West Midlands/East Midlands border.
  • Felixstowe and Harwich in Eastern England.
  • Thames (presumably around the former Freeport of Tilbury) for London.
  • Solent (centring on the former Freeport of Southampton), in the Southeast.
  • Plymouth, in the Southwest.
  • Reinstatement of the former Freeport of Liverpool, in the Northwest.

In further good news for the Northeast, Mr Sunak also announced a new Treasury office in Darlington – which, in addition to the Teesside Freeport, will reinforce investment away from London.

As we recently wrote, property in the Northeast is among the cheapest in the country, so now could be a good time to investigate this area for potential investments.

What do you think of Mr Sunak’s announcements? Share your thoughts with us on social media

Share
Build: 1.3.7.16389