Spring Budget: The industry predicts

Chancellor Jeremy Hunt will deliver his 2024 Spring Budget on Wednesday 6 March. It was originally thought he would introduce a 99% loan-to-value mortgage scheme, but recent reports suggest that plan has been axed. The Sunday TImes also reports that holiday lets have been targeted for a tax raid by Hunt. The industry reflects on what they want, and expect, tomorrow.

Daniel Austin, CEO and co-founder at funding specialist ASK Partners

With housing set to be a battleground point in this year’s election, it is expected to feature heavily in Wednesday’s Budget. As the sector moves to the top of the agenda for all parties, we hope to see a long-term plan for new homes, including social housing, however, we expect we will see more short term fixes. Stimulus will be welcome but can create unnecessary froth. Voters and developers alike will be keenly listening out for housing policy in the Budget. For voters, a stamp duty holiday or reprieve may be a welcome sign. For developers, eased planning regulations for brownfield sites and conversions will be popular.

However, the government will be faced with a challenge – striking a balance between trying to increase housing supply and therefore affordability by supporting developers and private landlords, but appealing to voters who do not want to see greenfield development. The planning system remains hotly political and as a result, landlords and developers are unlikely to see much in their favour.

As a debt provider, we hope to support the best sites in prime locations with well-capitalised sponsors who understand their product. Following this strategy, we aim to bolster developers’ initiatives with the flexible underwriting approach that is necessary for navigating current planning rules and market uncertainty. This will enable us to continue to offer opportunities for the growing number of private individuals opting to invest in property debt.

Gina Peters, head of landlord & tenant at Dutton Gregory Solicitors

As an industry we are hoping for some significant announcements to be made, but whether these would benefit the industry in the long term is a concern. There needs to be support across the board, as ultimately the status of the housing market will greatly affect the buy-to-let and rental market. Both need significant attention and clarity on proposed reform and when this will happen.

In terms of housing, many have already stated the need for an incentive for first time buyers, to help them get onto the housing ladder and give the housing market the boost it desperately needs. Critically, this would help the next generation of buy-to-let landlords to broaden their portfolios and provide much needed private rental properties.

There also needs to be sensible housebuilding quotas for councils as well as increased investment. The housing shortage in the UK is evident, compounded by a large rise in our population number and an increase in the age we are living to. Support for local councils and realistic targets will help encourage more effective house building, and again, provide more suitable housing for those wishing to get onto the house ladder and free up the increased demand and reliance on the rental sector. There must be a way for people to progress to property ownership.

For the buy-to-let industry, a change in mortgage interest relief would make a big difference and restore some confidence for landlords, as well as further incentives for landlords to deal with properties that require upgrading, particularly those with regular recurring mould and damp. Grants for both ventilation and insulation would be key target areas. This would also work hand in hand with aiding landlords in increasing the EPC rating of their properties, which for many, is financially unattainable.

Susannah Streeter, head of money and markets, Hargreaves Lansdown

Speculation over what’s in and what’s out of Jeremy Hunt’s budget is reaching fever pitch, ahead of the big reveal on Wednesday. What appears clear is that the Chancellor has a lot less fiscal room to play with than he hoped, which is why he’s played down speculation about significant tax cuts. Warnings are coming thick and fast, from the Office of Budget Responsibility and the International Monetary Fund, about the financial irresponsibility of offering big sweeteners. Given the huge borrowing commitments the government already has to honour, it seems unlikely there will be a big fanfare of an income tax giveaway. However, a further cut to National Insurance is still on the cards. There is though likely to be a good deal of other tinkering by Houdini Hunt, who is set to show a sleight of hand with an array of smaller moves to try and please the voters ahead of the election.

Lauren Hughes, head of customer success at Vouch, a tenant referencing firm

Should the sector be getting excited about this week’s Budget? Probably not. Amongst the mass of rumours and policy peeks we’ve been given over the last few weeks, housing and renting has barely featured.

Despite a huge array of areas that are crying out for reform and funding, the fate of the nation’s housing doesn’t seem to be anywhere near the top of the agenda. Expect some tinkering around the edges when it comes to tax and mortgages, but agents and landlords shouldn’t hold their breath for anything more substantive.

Oli Sherlock, managing director of insurance at lettings platform Goodlord

This year’s Spring Budget is unlikely to offer up much in the way of major changes to housing or rental market policy. As we’ve seen in recent years, tackling the housing crisis and relieving the pressures on the PRS clearly aren’t priorities for this government.

If speculation is to be believed, there will only be a handful of things relevant to the sector in Wednesday’s announcement. This looks set to include closing the tax break loophole for furnished holiday lets, which is a welcome bit of ‘levelling up’.

It may also include the launch of 99% mortgages, which could have a positive impact on the market by enabling some tenants to move into home ownership and thereby take pressure off existing rental stock.

But it could also further incentivise landlords to sell-up at a time when we should be incentivising them to stay in the market.

And whilst the Chancellor could surprise us, anyone hoping for a rabbit-out-of-the-hat moment that would move the dial for the PRS and wider housing market is likely to be disappointed.

Derek Austin, commercial property partner at Dutton Gregory Solicitors

The commercial property market would greatly benefit from measures to create confidence for businesses. Since the pandemic, the commercial property sector has shifted, and not yet settled. With more businesses adopting hybrid working practices, the key to meeting current demand is to create flexibility for retail, office and industrial spaces.

Landlords offering flexibility are still seeing buoyant regional activity especially in the South-East, although businesses have been taking shorter leases which creates uncertainty. Short term tax giveaways may please voters, but do not tend to enable businesses to plan far enough ahead. A more strategic reassessment of property taxes including SDLT and business rates would be welcomed by commercial property owners, occupiers and investors, many of whom will otherwise sit on their hands until the political fallout settles after the general election.

Jeremy Leaf, north London estate agent and a former RICS residential chairman

Most people, and political parties, agree that we need to address the chronic shortage of affordable homes to buy and to rent. We are hoping for proposals that go some way to achieving that goal, over and above bringing more empty homes and commercial premises into use, particularly on brownfield land, which has received considerable publicity. We don’t want more talk, we want action.

A strong housing market is not only beneficial to those directly involved in the industry but job and social mobility has a multiplier effect on many businesses, as well as the wider economy. Building more homes, particularly where most needed, is vital to keeping prices and rents in check but will take time, long-term vision, planning reform and political consensus.

Extra shared ownership support, making it easier to enter and leave the sector and including revision of upper-income thresholds, would be welcome. A revised Help to Buy, rather than Help to Sell, has been suggested but it mustn’t inflate house prices in the short term, and land prices and supply in the longer term. Any new version of the scheme should be time-limited and targeted on new build initially, then existing homes, in order to avoid previous problems recurring. governments should know by now – it’s difficult to assist first-time buyers with their property purchases without boosting prices.

Aspiring first-time buyers would much prefer to pay their own mortgage than their landlord’s and they are the lifeblood of the market as they trade up regularly, whereas investors often acquire similar properties but remain on the lower rungs of the ladder. The government hinted that first purchases could be made more affordable, such as easier deposit saving, perhaps by an extension of the ISA scheme, and stamp duty concessions. Stamp duty keeps owners in homes they don’t need or want, reduces choice and inflates the cost of those aspiring to buy or rent, to say nothing of the negative impact on job and social mobility. This unpopular tax could be replaced by a fairer distribution of council tax, which is currently based on values from over 30 years ago, particularly on higher-value homes, though the cost and delay will mean change won’t happen anytime soon.

Raising the ‘Rent a room’ tax relief in line with rents – ie about 50% since it was set in 2016, would help make better use of existing resources.

However, I suspect very little will actually happen in the Budget because the government can see that without doing too much the housing market is improving on its own.