Property update from Philip Hammond's Spring Statement 2019

publication date: Mar 14, 2019
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

Spring Statement from Philip Hammond March 2019
Some property news....

 

In between another disastrous week in parliament, Philip Hammond, our pretty much invisible Chancellor, delivered a rare speech called the ‘Spring Statement’ to explain where we are financially and give a little bit more detail on monies being invested in the country.

From a property and housing perspective, there is little to get excited about as this was more of an ‘update’ now we have just one budget a year.


Spring Budget Highlights:-

If we do get a ‘smooth’ Brexit Mr Hammond, according to the BBC says he will free up more money to “cut taxes and spend on public services”.

 

Just in case we don’t… there is a pledge to spend just over £25 billion to boost the economy.


There was also an update on economic growth – with the Office of Budget Responsibility cutting the growth forecast for 2019 to 1.2%. The BBC says this is “the weakest growth rate since 2009” and way behind the 1.6% previously predicted.

Other things mentioned are more reminders of things that have previously been announced:-

 

CGT private residence relief – confirmation of a consultation on lettings relief and final period exemption, referencing the private residence relief.


£3bn is available for affordable homes and hopes to help build 30,000 new ones - this will be great for those that receive one, but the ‘wait’ for social/council homes is around 1,000,000, so still a long way to go.


The government are still hoping to increase new builds to 300,000 per year (little hope of this currently!) and to do this they are aiming to improve the planning system further including:-

  • An "Independent Report on Build Out Rates" – referencing Oliver Letwin’s report on the need for different tenures, especially on large sites.
  • Allowing greater change of use between premises
  • New permitted development right to allow upwards extension of existing buildings to create new homes.
  • An “Accelerated Planning Green Paper” to speed up the end-to-end planning process.

And, the government are also looking to create a new “Future Homes Standard” for 2025 aiming at achieving “low carbon heating and world-leading levels of energy efficiency” for our new builds. 

 

One extra useful piece of information that has come out of this statement is that 15% of our workforce ie 4.8mn are now self-employed – worth bearing in mind for those letting homes and also it’s likely to restrict access to buying a home unless good financial records can be produced.

What is the most useful information?

From an investment perspective the “Transforming Cities Fund” worth £60 million of investment for 10 cities in England will now fund 30 new schemes. This money isn't new, but the way they are going to help areas and how much is going to spent in each area has been announced. 

 

The funding is going to be spent on:-

  • Bus station upgrades
  • New cycle lanes
  • Road improvements

Monies given range from £4mn to £10mn, so not huge sums, but positive changes like this can offer opportunities for people to purchase properties which may well be more attractive once the work is done. 

Cities receiving this funding include:-

 

Derby, Nottingham, Leicester, Portsmouth, Sheffield, Southampton, Norwich, Plymouth and Stoke-on-Trent, plus West Yorkshire and North East CA.

 

So, there isn't much in the statement to 'save' or 'change' the property market, so where do we go from here? 

 

What will happen to the property market from here? 

As it’s difficult, if not impossible to predict the impact of Brexit, or no Brexit or no deal Brexit….. I think all we can do is look to see what's happened during other crises and highlight that there are currently three scenarios:-


Scenario 1

Continued stagnation of the property market, subdued property prices and transactions and rising rents.

 

Scenario 2

A deal is struck, certainty restored and the market bounces back due to at least six months of ‘pent up demand’ from those holding off making a decision for fear that Brexit would ‘crash’ the market.  Prices and transactions could rise for a short time, then are likely to stabilise, while rents are likely to move in line with real wage growth. 


Scenario 3

Brexit, soft, hard, deal or no deal – or indeed something completely different, such as issues with the Chinese economy – does "crash" the market and we see 5-10% price falls, transactions falling back to 2009 levels (but bear in mind this has already happened in some areas such as  Oxford and Cambridge) while demand for rental accommodation remains strong and rents are stable to rising.

I think I’ve covered all the bases I can bearing in mind we are in a bizarre scenario where we genuinely don't know from one day to the next what's going to happen to the UK economy or indeed in the world of politics. 

 

What do you think will happen? Keen to hear your thoughts, email me

 

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