The industry will have watched the Chancellor’s Budget yesterday with bated breath, waiting to see which policies are being brought forward in this first year of Government. On the whole, relatively few.
Emphasis was placed on infrastructure – it’s full steam ahead for the ‘Northern Powerhouse’ with decision making powers over issues such as regeneration and transport being devolved. Cities including Liverpool, Sheffield and Leeds are set to follow Manchester in securing greater control of their transport budgets if they adopt directly-elected mayors. New body ‘Transport for the North’ (which has been given statutory status) will receive a £30m budget for local transport improvements, including the adoption of an Oyster-style payment system. As well as a passing mention of Crossrail 2, the Chancellor also announced a £5.2bn investment in transport in the Midlands – what the Government has dubbed the ‘Engine of Growth’.
The Chancellor is also devolving the decision on Sunday trading hours to elected mayors and councils. An extension of trading hours could prove positive to the retail sector as economic activity is boosted. It may also help to revive our high streets and drive fresh demand for new stores and shopping centres.
Construction businesses will also feel the benefit of a cut to corporation tax from 20% to 18% by 2020. However, it was not all good news for businesses as the Chancellor announced that large businesses (with profits of over £20m per year) will be funding this tax cut. Osborne has brought forward payment dates for these businesses – this is expected to raise in the region of £7.8bn.
On the issue of housing, Osborne reiterated his commitment to both the ‘Help to Buy ISA’ and the new round of Right-to-Buy reforms without directly addressing the subject of housing supply, omitting the Government’s commitment to build hundreds of thousands of new homes – interesting given the continued attention placed on the UK’s housing crisis.
Inheritance tax is to be reformed so that properties worth up to £1m can be passed on to children without being taxed. This is likely to result in a reduction in the number of homes coming on to the market as people no longer have to sell them on to pay for large death duties.
The Chancellor also stated that social housing tenants with household incomes of over £30,000 (£40,000 in London) will be required to pay market rate for their accommodation from 2017/18, halving the previous cap of £60,000. Restrictions on mortgage tax relief for private rented accommodation were also announced, which the Chancellor hopes will create a level playing field for those who ‘buy-to-live’ and reduce the tax advantages enjoyed by buy-to-let landlords. This has led to a drop in shares in housebuilders and estate agents since the Budget announcement yesterday lunchtime.
Yesterday’s Budget will be remembered as the ‘Living Wage Budget’ with property and construction much further down the agenda. It looks like we will have to wait a bit longer, at least until the Comprehensive Spending Review in the Autumn, for more clarity on the Government’s key policies concerning the bellwether of the UK’s economic growth – the property and construction sector.