The next budget, led by new Chancellor Rachel Reeves, will happen on October 30.
Most departments will have to take real terms cuts, with current tax rises expected to raise around £8bn. This will come from headline-grabbing VAT on private school fees to change to the non-dom tax rules and a possible rise in fuel duty.
What about housing?
Knight Frank has recently published a survey in which housebuilders stated their priorities: they want increased funding for planning departments, a revamped First-Time Buyer programme, more incentives and tax breaks to build, and a stamp duty cut.
85% of the sector believe that housebuilders don’t have the capacity to deliver more than one million homes over the next five years, compared to the 1.5 million homes pencilled in by Rachel Reeves to unlock the housing crisis.
Whilst the budget is likely to increase capital gains tax, potentially having a dampening effect on house prices, this survey shows that there are still many opportunities for regulatory easing or financial incentivisation in the Budget that could work towards closing the gap between what the housing sector thinks it can deliver and what the Government would like it to deliver.
Councils sound the alarm over £2.2bn black hole.
It's not just house builders who are feeling uncertain in the face of changes. Local councils have offered a joint statement issuing the alarm on the £2.2bn national black hole for housing. Over 100 have signed a report which suggests five solutions to the council housing crisis.
The councils are asking for reform to the Housing Revenue Account model, and an emergency cash injection of £644m. They’re also proposing a reform to Right To Buy in order to protect newly-built council housing stock and reduce the discounts on properties.
Further proposals include: removing bureaucracy on existing funding; making sure that existing council houses are up to the best possible standards, and delivering new council homes by closing the funding gap and completing stalled projects.
Property investments come under pressure
Housing investors have taken fright at reports that capital gains tax on investments will rise, and prices have chilled in recent months. Those who own second homes, or rental properties, are no longer seeing the returns that they’d hoped due to interest rate rises and other associated costs of holding property as an asset. With these headwinds, a capital gains tax increase could see values fall again.
Rayner secures £1bn ahead of Budget day
Despite the pressures and difficulties in the housing sector, there are glimmers of hope. Reports in the press state that the Housing Secretary has secured £1bn in funding, as Rayner has emphasised that council housing is vital to delivering the Government’s target to build 1.5 million homes over the next five years.
In July, Rayner notified local authority leaders of her plans to provide details of government investment in social and affordable housing at the spending review. It’s unclear whether the £1bn also includes the £450m earmarked for the Local Authority Housing Fund. This will support councils in adding homes for families at risk of homelessness.
Grafton Empty Homes is ready to help
Get in touch with Grafton Empty Homes today to see how we can help you with dealing with empty homes in your neighbourhood, tracing beneficiaries or if you're a housing officer at a local authority we can support you to bring long-term empty homes back into use.
