A busy year ahead as Generation Rent are encouraged to be Generation Buy.
Today’s Budget was probably one of the worst-kept secrets and its live delivery didn’t deliver any huge shocks. Rishi Sunak opened the 2021 Budget saying that he would do ‘whatever it takes’ during the pandemic, and that he has, and will continue to do so. Over the last year, the Government has committed £280bn to supporting business, paying wages and maintaining a slow but steady pulse in the economy. People and business are still a long way from ‘normal’ life but the Government are keen to draw a line under its fiscal support. So, did this Budget mark the start of the end?
While Sunak alluded to measures ending in the near future, today is not the day. The Budget committed an additional £65bn of measures to support the economy (which brings the total fiscal support from last year and this to £407bn). The furlough scheme has been extended to the end of September, a further 600,000 self-employed people will be eligible for grants, the Universal Credit top-up will continue for a further six months and the 100% business rate holiday in England will continue from April to June.
The rise in Corporation Tax to 25% has been put back to 2023, and inheritance tax, Capital Gains Tax and Pensions lifetime allowance are all frozen until 2026. Meanwhile an impressive 130% ‘super-deduction’ has been declared on tax for investments made by companies.
Housing didn’t deliver any great surprises. The stamp duty holiday on properties up to £500,000 will be kept in place until the end of June, and then lowered to double its usually level (£250,000) until the end of September. On 1 October it returns to its usual levels…we can only hope homeowners have their contracts signed and ready by that date.
Sunak and Johnson made clear their intention to turn ‘Generation Rent’ into ‘Generation Buy’ and announced the successor to Cameron and Osborne’s 2013 Help to Buy mortgage scheme. Today, the Government confirmed a mortgage guarantee on 95% mortgages to help first time buyers.
So, what does this mean for the rental and housing market? I’m not sure anyone would make predictions in a year like this, but similar initiatives in the past do give us a clue. We can expect a pretty seismic shift in the housing and rental market over the coming months as homeowners look to sell and move quickly to take advantage of the savings. The knock-on effect could be an increase in house prices, but only time will tell. Strap yourselves in, this year will be busy!
On the plus side, alcohol duties are frozen for the second year in a row, so don’t feel bad reaching for that second beer on a Friday night!