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Spring Statement – big talk, little action

The Spring Statement was delivered by Chancellor Sunak, on a backdrop of war in Europe, rising inflation, interest rates and a worsening energy crisis. What was in it for property?

The Negotiator


The Chancellor of the Exchequer, Rishi Sunak, delivered his Spring Statement ‘budget’ to a packed Commons at lunchtime.

His measures were never going to affect the housing market directly, but any fiscal relief means an offset against rising inflation and interest rates and a more positive outlook for the housing market. Inflation, he said, will average 7.4% this year, based on Office of Budget Responsibility forecasts.

His preamble painted a backdrop of the energy crisis, rising inflation and the war in Ukraine, as if to lower, rather than lift expectations, though he did say he had accounted for the conflict in his forecasts. His changes go some way to relieving the growing pressure on households, but not much and certainly not enough to make a real difference to the overall challenge to household finances.

Here are the headline measures:

Income tax

Basic Rate Income Tax to be cut to 19p from 20p – from 2024. This amounts, he said, to a £5bn tax cut for £30m people.

Raising of National Insurance threshold

Having announced a £300 increase in the threshold, Sunak made the significant announcement that this would be ten times that amount, at £3000. NIC will now cut in at an income of £12,570, taking affect this July 2022. This amounts, he said, to a £6bn tax cut for 30 million people.

VAT cut on home energy efficiency measures

Energy improvement products such as insulation, solar panels and heat pumps have had VAT cut from five per cent, to zero. The cut is in force for five years. It could save £1000 on a solar panel installation to a typical household.

5p per litre cut on fuel duty

Of no surprise and small help in view of the amount fuel has risen in the past month – effective 6pm tonight for one year.

Business rates

The Chancellor announced his help to small businesses, but focusing only on the retail, hospitality and leisure sectors, with a 50% discount on business rates, up to £110k.

Industry reaction
timothy douglas ropa propertymark

Timothy Douglas, Propertymark

Timothy Douglas, Head of Policy and Campiagns, Propertymark: “We welcome today’s announcement that VAT will be cut on the installation of energy saving materials in residential properties. With rising energy costs as well as looming energy efficiency targets for the property sector, financial incentives are well needed.

“We will be scrutinising the details of this scheme as they are released to ensure they have the maximum impact for all homeowners, including investors in the private rented sector and that landlords and letting agents can take full advantage of the change.”



Iain Mckenzie image

Iain Mckenzie, Guild of Property Professionals

Iain McKenzie, CEO of The Guild of Property Professionals: “The country is grappling with a cost of living crisis and today’s Spring Statement aims to give some breathing space to consumers.

“The financial challenges that people face will always trickle down to homeowners, those looking to get on the property ladder and those seeking affordable properties to rent.

“While energy price rises will increase the cost of powering our homes, the measures taken to cut VAT on environmentally friendly power sources and energy-saving insulation will give homeowners some relief going forward.

“Regardless of these initiatives, average annual inflation of 7.4% will hit people hard and reduce the affordability of mortgage and rent payments.

“Raising the national insurance threshold to £12,570 will give 30 million people more money in their pocket to take on these challenges. Yet inflation isn’t set to be under control until 2024, and despite today’s pledge to cut income tax by then, the next two years are set to be a difficult time for many.”

Ben Beadle, TDS, imageBen Beadle, Chief Executive of the National Residential Landlords Association: “We welcome the decision to scrap VAT on energy efficiency measures. However, it remains disappointing that the Government has again failed to explain what will be required of the rental sector when it comes to energy improvements.  The sector needs clarity as a matter of urgency.

“More broadly, as renters, along with all others, face a cost-of-living crisis, the Chancellor should have reversed his decision to freeze housing benefit rates. Without this, those relying on the benefit will find it increasingly difficult to afford their rents.”

Bobby Singh Braich Belvoir

Bobby Singh Braich, Belvoir

Bobby Singh Braich, Managing Director of Belvoir Ketting & Corby:  “One key issue that was highlighted was the current cost of living crisis we are all facing. Despite the fuel duty cut, with rising energy bills, food prices, and increases in inflation and interest rates, there is a very real affordability issue which could affect tenants securing rental properties and would-be home purchasers being accepted for mortgages.

“There was some help announced for families, such as the doubling of the government’s household support fund and increasing the National Insurance threshold, which will hopefully give a much-needed cash injection to those struggling to pay bills but, in my opinion, it does not go far enough.

“At the moment, and has been the case since the start of the pandemic, the demand for properties – both sales and lettings – by far outweighs the housing stock available which continues to drive up prices.

“I think, going forward, we can expect to see a trend for downsizing to save money. Those renting may now also face more stringent credit and affordability checks from landlords.”

marc von grundherr

Marc von Grundherr, Benham & Reeves

Marc von Grundherr, Director of Benham and Reeves: “The biggest personal tax cut in the last 25 years and an early election Budget for sure. With such headline grabbing announcements, the lack of property focus will easily slip through the cracks.

That said, environmentally minded homeowners will welcome today’s announcement that VAT on green additions to their home will now be cut from the existing 5%. Of course, with inflation also being announced at 6% today, has this benefit already been negated?

While great for the planet, solar and hydro energy outlets can be expensive to implement and take some time before the return starts to outweigh this initial cost and so it remains to be seen how meaningful this move will actually be.”

Link to Portals feature

Michael Bruce, CEO Boomin

Michael Bruce, CEO and Founder of Boomin: “A Budget with nothing much for housing but a little for the household itself and this was largely to be expected.

The Stamp Duty holiday introduced during the pandemic was probably the biggest bone the government has thrown home buyers in recent times, so to expect another to come so soon after the final December deadline is certainly wishful thinking.

Especially when house prices remain so buoyant as, after all, a high rate of house price growth is the government’s driving indicator of success and they’ll only stoke the fires when these flames are starting to fade.”

Jason Tebb, CEO, OTM

Jason Tebb, CEO, OnTheMarket.com: “Although the Chancellor didn’t deliver anything radical in the way of assistance for the housing market, the removal of VAT on the installation of solar panels, heat pumps and insulation which he said will reduce utility bills by £300 a year is a step which will help some homeowners.

“The rising cost of living, particularly energy and fuel bills, inflationary pressures, higher interest rates and the upcoming increase in National Insurance contributions mean households are feeling the pinch and therefore any measures to help reduce the burden are welcome.

The housing market is a vital sector when it comes to the wider economy; we witnessed during the pandemic how the stamp duty holiday provided such a boost for so many related industries. 

While a return to the stamp duty holiday was never on the cards, further support for first-time buyers, measures to encourage the building of more affordable homes and a solution to the cladding crisis would also be welcome.”

James Forrester, Barrows Forrester

James Forrester, Barrows Forrester

James Forrester, Managing Director of Barrows Forrester: “Such a bold move on income tax is of course welcome, but let’s not forget that this is somewhat diminished by an increase in both personal and employer national insurance, as well as the impending hike in corporation tax.

“This will cause further problems for homeowners across the nation who will have seen a sharp increase in the cost of running their home already this year, with both an increase in interest rates, rising energy costs and a jump in fuel prices all bringing additional financial strain.

So while there’s been no real property initiatives announced today other than 0% VAT on energy saving initiatives, other announcements such as the cut in fuel duty and the increase to the household support fund will, at least, help reduce this overall cost of living.

This should provide some small amount of breathing room for those that are particularly hard pressed at present, although it’s unlikely to solve the issue completely.”

Geoff Garrett, Henry Dannell

Geoff Garrett, Henry Dannell

Geoff Garrett, Director, Henry Dannell: “Although there was generally no expectation that the property sector would feature in today’s Budget, some may have been hopeful of a breadcrumb or two from Mr Sunak in order to keep the market moving forward against what could be described as gathering financial headwinds.

“We’ve now seen a string of consecutive increases to the base rate and this is not only going to impact the monthly payments of those homeowners on variable rate mortgages, but it’s also going to reduce the bullish approach to borrowing that we’ve seen from homebuyers in recent years.

“The impact is likely to be a slowing in the rate of house price growth as buyers commit to lower borrowing amounts and sellers are forced to adjust their valuation expectations.”

Vanessa Hale, Strutt & Parker

Vanessa Hale, Head of Residential Research, Strutt & Parker: “The UK housing market this year has shown it is undeterred by rising fuel prices, growing inflation, and increasing interest rates. This resilience was demonstrated this week with Rightmove confirming a new record high average house price.

“The measures announced by the Chancellor today which look to address these pressures on households will give many some relief from rising costs, and act as a boost to consumer sentiment. However, with demand in the market continuing to outstrip supply, the ongoing shortage of stock will likely sustain further house price growth in the coming year, despite wider macroeconomic influences.

“That said, market activity and price growth could cool this year if these pressures continue to deepen. If the price of energy, materials and borrowing costs continue to rise, along with inflation, demand could soften and this will impact the pace of growth currently forecasted. As ever, the wallets of those yet to get onto the housing ladder will likely be hardest hit, driving increased pressure on the private rental sector.”

Jeremy Leaf

Jeremy Leaf, Estate Agent and former RICS residential chairman: “While we welcome fuel duty and tax cuts which help the majority, it is disappointing that there wasn’t greater recognition of the need to address the huge shortage of affordable housing. Property prices continue to rise, mainly due to lack of new supply, and more affordable housing to buy or rent would help bring more balance to the housing market.

“We are pleased that the Chancellor didn’t further target landlords with more taxes and red tape. What is happening in the sales market is being mirrored in lettings, with a shortage of stock pushing up rents. It is important not to lose any more landlords, which would negatively impact supply and mean higher rents.
“We would have liked to see some resolution of the cladding crisis, again helping release more properties onto the market, as owners who wish to move can finally sell up. These are so often the more affordable properties, particularly flats, which appeal to first-time buyers.
“As we forecast, there was some focus on energy-saving materials, with VAT reduced to zero for the next five years for homeowners installing solar panels or heat pumps. While this will benefit a few homeowners with the means to install these in the first instance, there is no point in doing this unless there is sufficient consumer buy-in and confidence in the product, which isn’t there at the moment with regard to heat pumps. Consumers worry about the maintenance and servicing of these and there needs to be more confidence around their operation.”
Eddie Hooker, mdeposits, image

Eddie Hooker, CEO, Hamilton Fraser

Eddie Hooker, CEO of Hamilton Fraser: “A difficult budget statement by the Chancellor, Rishi Sunak, against the backdrop of the ongoing fallout of the pandemic, the worsening crisis in Ukraine and the impact to the wider world economy. Any help for hard pressed families and businesses is welcomed although I suspect the Chancellor’s hands were severely tied when faced with the almost impossible choices in front of him.

“The most surprising statement, however, did not come from the Chancellor rather from the Shadow Chancellor, Rachel Reeves, who again could not resist her serial attack on landlords and almost screaming that they do not pay enough tax whereas their tenants do.
“When will the Labour Party understand that landlords are part of the solution rather than the problem. All political parties need to embrace the Private Rented Sector and encourage its growth rather than forcing landlords from the market which will only add to the cost of living crisis and a lack of affordable homes.”


March 23, 2022

One comment

  1. Usual waffle “official comments” – how about saying what they really think privately for once in that the government doesn’t have a clue, has totally messed up the PRS, wastes billions and little man pays for it ? eventually. The pathetic 5p has been undone in 24hrs with Brent at 122 and the give aways amount to peanuts. There you go, that’s what 99.9% of the population think who are the real experts.

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