How will the budget impact the buying and selling of a property?


British Chancellor Rishi Sunak said the government would “invest more in housing and home ownership”. Photo: Matt Crossick / Empics

Buyers and sellers were hoping Chancellor Rishi Sunak would use the fall budget to fix the housing market, but instead his statement was fairly light on the real estate front.

Some of the current problems in the housing sector are the fallout from the Chancellor’s stamp duty holiday, launched to try to shake up the housing market once it reopens after the first nationwide lockdown.

While the tax break has helped many buyers rise and climb the real estate ladder, it has also fueled a sales boom as house prices hit record highs. At the same time, this created a distortion in the market and resulted in demand far greater than supply.

Sunak said the government would “invest more in housing and home ownership.” It plans to invest £ 24bn ($ 32.9bn) in housing, including £ 11.5bn to build 180,000 affordable homes.

However, questions arise as to whether the Sunak’s measures will really address the housing crisis and whether the government will keep its promise.

Marc von Grundherr, director of estate agent, Benham and Reeves, said: “Disappointing to see such a brief mention for the UK property market. The Chancellor has chosen to give the sector a step back with only a handful of figures on the front page. “

Here we take a closer look.

Watch: Budget 2021: Rishi Sunak Unveils Tax Cuts, Increase in Benefits as He Warns of “Hard” Months to Come

Investing cash in affordable housing

Sunak has announced an investment of £ 11.5 billion to help build up to 180,000 affordable homes, with 65% of the funding for homes outside London. Brownfields have been targeted for development.

While the move was well received, some are skeptical as to how it will play out.

Ian Biggs of Coventry Building Society said: “We welcome the Chancellor’s commitment to build 180,000 new affordable homes by 2025/26. It’s a start, but we’ve seen such promises before. An increase in the supply of housing will be vital to keeping the market moving – and attracting more people onto the housing ladder. “

Evie John, Director of PwC, added: “Any increase in housing supply is welcome, especially when there is a commitment to affordability and a sustainable approach to development. While 180,000 additional new homes leave the government far from its ambitions, this is a step forward. “

Brownfield development

Sunak has announced that £ 1.8 billion will be spent on commissioning 1,500 hectares of brownfield land.

Hugh Gibbs, co-founder of real estate company SearchLand, said: “This country does not have enough housing. The UK affordability crisis has been developing for decades and there is an urgent need to provide more high quality affordable housing, but the pace of construction is failing to keep up with demand.

Read more: Sunak cuts taxes on draft beer in most sweeping reforms in 100 years

“As such, the Chancellor’s funding pledge to encourage residential redevelopment of brownfields in more than 100 areas is a positive step in the right direction, but there must be a concerted effort on the part of the government to ensuring that homes are fit for purpose and affordable for them. in need. “


Sunak also reiterated its pledge to a £ 5bn fund to remove hazardous coatings from buildings most at risk. This is to be partly funded by a 4% levy on developers with profits exceeding £ 25million, in order to create a pot of £ 5 billion to solve the problem.

Myron Jobson of Interactive Investor said, “Leaseholders who have purchased their homes in flat blocks affected by hazardous siding may breathe a little easier after this announcement. Many faced huge costs for repair work or fire patrols to fix a problem they weren’t responsible for.

“Thousands of people trying to sell apartments in paved blocks have found that there is little to no interest in their property due to the crisis – and even if a buyer is found, some mortgage providers have viewed apartments with coatings unfavorably. Some may argue that more money is needed to fully solve the problem. “

Stamp duty

No other reform of the stamp duty has been announced. Some believe that the Chancellor missed a great opportunity to overhaul the current system.

Biggs said: ‘The Treasury has had over a year of exceptional returns while the stamp duty holiday was in place, raising £ 13.5bn in the process, and yet there does not appear to be any lessons learned.

Read more: Sunak resets UK spending target for post-COVID economy

“We still believe there is a smarter way to tax property purchases in a way that maximizes returns on investment for the taxman, reduces the financial burden on buyers and, as proposed by the Green Finance Institute, encourages much-needed green upgrades in homes across the country. Those looking to move up the property ladder – or move next year will be disappointed the Chancellor hasn’t offered them anything substantial in this budget. “

One idea that has been brought up is the abolition of the lower threshold – 2% on properties costing over £ 125,000.

Nitesh Patel of the Yorkshire Building Society said: “This would make it easier for homeowners at the bottom of the ladder to move to a larger house and increase the supply of existing housing available to first-time buyers.”

Lack of incentives to purchase

It is perhaps telling that Sunak has not announced any incentives for buyers.

Iain McKenzie of The Real Estate Professionals Guild, said: “This tells us that the government has high hopes for 2022 and expects property sales to remain buoyant in the months to come.”

Capital gains tax

A notable absence from Sunak’s budget was the Capital Gains Tax (CGT).

In fact, the only mention was in the budget document – not in the announcement as many had expected.

Read more: What Sunak’s Budget Means for Household Finances

Jobson said: “From October 27, 2021, the deadline for residents to declare and pay CGT after the sale of a residential property in the UK will drop from 30 days after the completion date to 60 days. For non-UK residents who have property in the UK, this period will also be reduced from 30 to 60 days. This will ensure taxpayers have enough time to declare and pay CGT, as recommended by the Office of Tax Simplification ( OTS).

Proposals to increase the CGT to align with income tax, made by the OTS last year, remain pending.

Nicky Stevenson, of Realtor Group Fine & Country, said: “Millions of homeowners across the country will be delighted to hear that the Chancellor has resisted calls to raise the CGT.”

Watch: How much money do I need to buy a house?

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