The Budget 2014: Reaction on Property

The Chancellor's Budget announcement of a £500 million Builders Finance Fund for small house builders will provide a major boost for housing supply and has been welcomed by the Federation of Master Builders (FMB)

Rui Vieira/PA Wire Property
Property

The Chancellor’s Budget announcement of a £500 million Builders Finance Fund for small house builders will provide a major boost for housing supply and has been welcomed by the Federation of Master Builders (FMB).

Brian Berry, Chief Executive of the FMB, said: “Access to finance is a major stumbling block for viable SME house builders so this government intervention is much needed as many major banks are still reluctant to lend for small residential developments. This additional support will provide the necessary finance to small house builders and help increase the overall supply of new housing through a well-functioning SME sector.”

Berry added: “Unfortunately today’s Budget overlooks the need to make our existing homes an infrastructure investment priority. A reduction in VAT to 5% on housing renovation and repair is the simplest and most effective way to empower home owners to refurbish their properties to make them more energy efficient and cheaper to run. This cut in VAT would provide a £15bn economic stimulus over five years and up to 95,000 jobs which re much needed while our economy is still in recovery.”

Commenting on the 2014 Budget, Simon Rubinsohn, RICS Chief Economist said:

"A tight budget with little room for manoeuvre. Yet again, the Chancellor has failed to overhaul the stamp duty system, with wages well below inflation and rents rising rapidly for years, many have been struggling to save for a deposit, let alone meet a huge tax bill. Helping more buyers to enter at the lower end of the market would have resulted in more movement and transactions, freeing up stagnant property chains and bringing badly-needed housing onto the market.

“While plans for regeneration and new homes in Barking, Brent Cross and the new garden ‘city’ at Ebbsfleet - which is really just a garden village - will contribute a little housing in the South East. These numbers are a drop in the ocean and do nothing to help others in the UK. More importantly, they don’t deliver the mix of homes we need across society, from the private rented sector to affordable and social housing.

“RICS has long called for investor prospectuses for garden cities, which we welcome today. But we need a more ambitious approach than 15,000 homes at a time. To provide investors communities and developers with greater confidence, what we need is a proper political vision for garden cities and the wider economy.

“Meanwhile, the much trailed extension of Help to Buy to 2020 is not a game changer. While it provides certainty and clarity to the market, creating another 120,000 new build properties is still a modest target. We need over 230,000 just to meet current demand."

Budget 2014: PwC comments on property taxes

Lee Stamp, private client tax director at PwC Newcastle, said:

"The Government has announced  the extension of the mansion tax to homes over £500,000 bought through a corporate envelope.

"The Chancellor is now using last year's punitive stamp tax on homes bought in 'wrappers' to deter overseas investors who "buy to leave" and are not investing.

"This creates an onerous burden and could have unintended consequences, for example buy to let landlords, funds and housing associations will be exempt from the tax but will still have to complete a tax return, resulting in an extra compliance cost. What's more, because the changes are introduced at different times any owner is going to struggle with getting the tax right."

"Clearly this regime, which was aimed at collecting taxes, is now seeking to change behaviour. The problem is that now the Treasury can collect mansion tax it could be easily extended to owner-occupied property and this would hit ordinary homeowners hard."

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