2020 Budget: What It Means For The Property Market.
Updated: Apr 26, 2020
With the 2020 budget announced last week, we've highlighted some key policies which will affect property investors, owners and first time buyers.
1. Affordable Housing Continues
It was announced that the Affordable Homes Programme (AHP) will be extended, allocating nearly £1.1 billion to fund the construction of almost 70,000 homes. In summary, the AHP is joint-funding project between the government and private investors.
Usually, if private investors plan to build a certain amount of houses, a percentage of these will be given to the government and used as council houses. Originally, this was only running from 2015-2020, but by choosing to extend it, it means that the government are taking more steps towards tackling the housing crisis.
2. Business Rates Relief
Under normal circumstances as an investor if you intended to buy and develop a commercial building for residential use, you would be subject to business rates.
However, now if the property's rateable value is below £51,000 you would not be liable for pay business rates for a whole year!
3. Brownfield Sites and Self Building
Shortly the government will share a register of all brownfield sites within the UK to reveal the unused land. As a priority they will encourage local council to make use of this land for the community but there may be opportunity for private investors.
In addition to that announcement, they will support those who want to build their own homes to find plots of land and provide help.
4. Lower Mortgage Rates
With the Bank of England announcing that they have cut their interest rates, this means that if you're on a variable-rate mortgage, you may end up paying less - for a while at least. This is due to the Coronavirus outbreak, in a bid to support those who will be unable to work as the virus continues to spread.
At present, this only represents around 11% of the outstanding mortgages in the UK: by cutting the rate, it means their mortgage will become cheaper effective immediately. But it may be an ideal time to apply for a new one too!
5. Stamp Duty for Overseas Investors
If you're an overseas investor, you will pay 2% more to buy a property in the UK, compared to UK residents under new plans announced in the Budget.
However, there is some criticism against this, as most overseas investors purchase expensive properties in central London, which are completely un-affordable for first-time buyers and therefore this scheme does very little to address the housing crisis as a whole.
6. Building Safety Fund for Cladding
In the wake of the 2017 Grenfell Tower fire, and with thousands of home-owners still living in un-sellable properties due to the cladding and fire-safety requirements, a Building Safety Fund has also been announced.
The government has set aside £1 billion to finance the removal of cladding from residential building in the UK. However, the buildings must be over 18 metres in order to qualify for the government funding.
7. Gigabit-Capable Broadband
The quality of your local telecoms infrastructure can be used as indicator for rental demand due to the digital needs that many tenants now command.
In fact our new Chancellor has now promised £5 billion to implement gigabit-capable broadband and 4G mobile coverage for rural communities.
The government will also shortly confirm on whether they will mandate that new build homes are built only with gigabit-capable broadband.
As highlighted in our previous blog regarding the General Election 2019 policies, the dust has settled and there are some positives for first-time buyers but also opportunity for UK investors.
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Normette Homes specialise in property investment and tenant sourcing.