Budget 2020: the figures
Housing was not a very prominent feature of the new chancellor’s Budget, which was dominated by emergency measures to shore up the economy amid the coronavirus outbreak.
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Rishi Sunak did include new taxes for overseas property buyers, funding to remove unsafe cladding, and some spending on new homes delivery. A full round-up can be found here.
But there were no updates on the First Homes scheme announced last month, which would hand first time buyers a 30% discount, while promises to bring the planning system into the 21st century were left for the housing secretary to touch on separately.
Other interesting revelations were to be found in the policy costings and economic forecasts issued by the Office for Budget Responsibility (OBR).
Compared to the guidance issued in March 2019, the OBR has made a significant revision to its March 2020 house price inflation forecasts, noting that house price growth will be much higher in the next few years than originally forecast.
The OBR expects values will end 2020 up by 4.3% annually, with growth peaking at 7.5% in the third quarter of 2021 before easing back to 4% in 2023. Overall, the OBR forecasts house prices will rise by 23% between the fourth quarter of 2019 and the first quarter of 2024, up from 17% in its previous forecast.
The OBR cites stronger real household income growth and lower interest rates as the primary reasons for the stronger upswing.
On Wednesday (11 March), the Bank of England reduced rates from 0.75% to 0.25%, taking borrowing costs back down to the lowest level in history.
Additionally, the OBR expects stamp duty land tax from residential properties to raise £8.6bn in 2019-20, rising to £9.7bn in 2020-21 and £10.4bn by 2021-22.
The income boost from SDLT comes after the government announced the introduction of a 2% stamp duty surcharge for all residential purchases by non-UK residents. The measure will be implemented from April 2021.
The Treasury is expecting a sharp rise in the number of overseas buyers purchasing homes in the UK before the surcharge kicks in.
It forecasts this will bring in more than £250m in revenue in 2020/21, followed by a £355m fall a year after its implementation.
Housing targets
The Budget reaffirmed the government’s commitment to creating at least one million new homes in England during this parliament, with an average rate of delivery of 300,000 homes a year by the mid-2020s.
But the latest data from the OBR shows around 276,600 net additional dwellings were added to housing stock across the whole of the UK in 2018/19.
It expects additional dwellings to rise to 287,200 in 2019/20 before falling to 247,400 by 2024/25.