There was a lot of media speculation before the budget that the Chancellor, Mr. Rishi Sunak, would look at introducing measures that would dramatically improve the prospects for the property market. Everything from planning through to stamp duty was under review.
As you might expect from the government (and the media), the actual changes are not that dramatic and will have little effect on the market.
The principal change for overseas investors is the non-UK resident Stamp Duty Land Tax (SDLT) surcharge. The government will introduce a 2% SDLT (stamp duty) surcharge on non-UK residents purchasing residential property in England and Northern Ireland from 1st April 2021.
Apparently, this will help to control house price inflation and support UK residents to get onto and move up the housing ladder. The money raised from the surcharge will be targeted to help address rough sleeping, or so we are told.
The buyer’s residence status will be determined by a new SDLT-only test. If the buyer is not present in the UK for 183 days during the year preceding the purchase, he will have to pay the surcharge. However, it appears he can reclaim the surcharge if he subsequently spends 183 days in the UK in the year after the purchase.
Some agents in London will argue the surcharge is yet another ‘nail in the coffin’ for the market there. That remains to be seen. It should, however, have less effect on the demand from overseas buyers looking to buy elsewhere in the country, particularly in the north of England where prices are considerably lower.
Mr. Sunak had this to say about providing more housing: “Today I can make good our promise to extend the Affordable Homes Programme with a new, multi-year settlement of £12bn. To support local authorities to invest in their communities, I’m cutting interest rates on lending for social housing by one percentage point. I’m confirming nearly £1.1bn of allocations from the Housing Infrastructure Fund to build nearly 70,000 new homes in high-demand areas across the country.”
Many analysts and commentators are already dismissing this as totally inadequate.
As for the planning system, the government is releasing detailed reform proposals in the next few months. Apparently, the changes will benefit everyone from developers through to home buyers – as government changes do.
In summary, the budget was a non-event for the property sector – good and bad, depending on your viewpoint.