The 2020 Spring Budget is a positive step in the right direction.
The Government has used its first budget to deliver reforms designed to stimulate the economy and promote long-term investment. Some of the announcements were expected, while others came as a surprise.
It was always going to be a challenging undertaking for the Chancellor Rishi Sunak given the challenges being posed by the Coronavirus. Nonetheless, the Government did not let this overshadow pressing national issues.
Changes to Stamp Duty
The expected Stamp Duty surcharge for international buyers of UK property was announced. However, the surcharge rate is 2% instead of the originally proposed 3% and will not come into force until April 2021.
This policy is designed to curb property price rises and ease pressure on buyers in areas with particularly in-demand real estate. It is expected to effect 70,000 of the UK’s 1.2 million annual property transactions.
This reform brings the UK closer in line with other countries like Australia, Singapore, Canada and Israel – all of which already have in place surcharges on foreign property transactions. Before this reform comes into force, it is likely there will be a surge in foreign buyer demand for UK real estate over the coming 12 months.
Affordable Homes Programme
Also announced was an extension of the Affordable Homes Programme with a new settlement of £12 billion, representing a £3 billion boost to the programme that began in 2016 and is due to end next year. £1.1 billion was specifically allocated for building 70,000 new homes in high-demand areas. This is a welcoming reform – especially as the UK remains in the middle of a critical housing crisis.
Additionally, the creation of a £1 billion Building Safety Fund whose first priority is to remove all forms of flammable cladding from residential buildings above 18 metre is long overdue.
A spending spree
Aside from the above reforms, the Government also pledged significant investment into the UK’s rail and road network, as well as improving broadband connectivity. In total, £600 billion will be spent on roads, rail, broadband and housing over the next five years.
The regeneration of the regional cities and towns is vital as part of a bigger strategy to address the housing crisis. With places like Liverpool, Newcastle and York experiencing rising demand for property, it is important they have the infrastructure needed to support their rising populations.
The real challenge now is for the Government to introduce and monitor the outcome of these reforms. Making bold policy statements is one thing but following through on these is another issue altogether.