From a stamp duty holiday, to vouchers to help pay for the insulation of homes, here’s how Chancellor Rishi Sunak’s announcements will impact the property market.
1. Stamp duty holiday
The Chancellor’s announcement that the threshold at which stamp duty is paid on property purchases will increase from £125,000 to £500,000 is great news for both first-time buyers and those looking to trade up the property ladder.
The government estimates that the change, which applies with immediate effect until 31 March 2021, will mean nearly nine out of 10 buyers will pay no stamp duty at all, saving them an average of £4,500.
The move will also help restore confidence in the property market by giving those who may have been hesitating about making a purchase a strong reason to go ahead with it.
2. Green Homes Grant
In a bid to help make homes more energy efficient, the government is launching a £2bn Green Homes Grant scheme.
Under the initiative, homeowners and landlords will be able to claim two-thirds of the cost of work done to improve their property’s energy efficiency, up to a maximum of £5,000.
For low income households, the government will cover the full cost of the work, up to £10,000.
The scheme is not only good news for the environment, but it should help homeowners save hundreds of pounds a year on their energy bills.
The government estimates it will lead to the upgrading of more than 600,000 homes across England, providing a boost to existing and future owners of older properties.
3. Job Retention Bonus
The health of the property market is closely linked to the number of people in work, with rising unemployment levels typically leading to forced home sales and even falling house prices.
By contrast, when unemployment levels are low, the housing market typically performs well, as people have the confidence to go ahead with a home purchase.
As a result, the Chancellor’s announcement of a Job Retention Bonus to encourage companies to keep on furloughed workers once the Coronavirus Job Retention Scheme (CJRS) ends in October, is good news for the property market.
Under the bonus, employers will receive a one-off payment of £1,000 for every furloughed employee who remains continuously employed until the end of January 2021 and earns an average of more than £520 a month.
The CJRS has helped more than 9 million people keep their jobs, and Job Retention Bonus aims to prevent these people from being laid off when the scheme ends.
4. VAT cut
The announcement that VAT will be cut from 20% to 5% on food and non-alcoholic drinks, and tourist attractions and accommodation from 15 July until 12 January 2021, should also indirectly help the housing market.
The hospitality sector employees more than 2.4 million people, the equivalent of 8% of all workers.
It is hoped that the reduction in VAT, combined with the Eat Out to Help Out scheme, under which the government will subsidise discounts of up to £10 per person for meals in participating restaurants during August, will help to support the sector and protect jobs.
Keeping people in employment, should in turn boost consumer confidence and help to support the housing market.
5. New infrastructure spending
The Chancellor plans to bring forward work on £8.8bn of new infrastructure projects to help create tens of thousands of new jobs.
Alongside hospital upgrades, schools’ maintenance and making public buildings more energy efficient, £100m will be spent on improving road networks and £1bn is earmarked for projects to boost local economic recovery in places that are most in need.
The spending should not only help to support employment, but it could also have a positive impact on local housing markets through improved connectivity and regeneration and economic recovery schemes.