Autumn Budget 2021 roundup
This year’s Autumn Budget contained some notable changes – as well as a landlord tax hike the government changed its mind on at the eleventh hour.
Here we summarise the key measures affecting the housing market introduced by Chancellor Rishi Sunak.
The government has promoted energy efficient properties this year – and the Budget reflects that priority.
As part of its push towards going carbon neutral the government is offering homeowners grants of up to £5,000 from next year to install heat pumps or other low carbon systems, like hydrogen-based heating systems.
Air source heat pumps typically cost between £6,000 and £18,000, so the cash is being used to ease the financial burden of going green.
This comes as the government looks to wean people off using gas boilers. Indeed, subject to a government consultation new builds will no longer be allowed to install new gas boilers from 2025.
Some £450m over three years has been pledged towards this boiler upgrade scheme. There is also a 1.425 billion Public Sector Decarbonisation Scheme, £950 million Home Upgrade Fund, £800 million Social Housing Decarbonisation Fund and £338m Heat Network Transformation Programme.
Another notable green announcement is the government is looking to empower councils to crack down on landlords renting out energy inefficient properties with £4.3 million of extra funding.
It’s been illegal to rent out a property with an Energy Performance Certificate rating worse than E since April 2020, and unless landlords have an exemption they can be fined by up to £5,000 per property and per breach.
Like with many Budgets in the past, the government made pledges about building homes.
The Chancellor said: “We’re investing more in housing and home ownership, too, with a multi-year housing settlement totalling nearly £24 billion.
“£11.5 billion to build up to 180,000 new affordable homes – the largest cash investment in a decade, 20% larger than the previous programme.
“And we’re investing an extra £1.8 billion: Enough to bring 1,500 hectares of Brownfield land into use [to] bring 1,500 hectares of Brownfield land into use.”
However the 180,000 pledge actually echoed an announcement made by former housing minister Robert Jenrick in September last year, rather than representing new funding.
Looking at the brownfield announcement in more detail, £300 million will be distributed to local authorities to unlock smaller brownfield sites for housing, while £1.5 billion will be used to regenerate underused land and deliver transport links and community facilities.
The government said this would unlock 160,000 homes in total.
Cladding and developer tax
The issue of removing flammable cladding from high-risk buildings – and who pays for it – is an issue that’s rumbled on since the Grenfell Tower disaster of 2017.
In a bid to tackle this issue the government pledged to spend £5 billion to remove unsafe cladding, prioritising the highest risk buildings.
However this represents another reiteration of previous policy, as the £5 billion was previously announced in February 2021.
In the aftermath of the renewed announcement critics have accused the government of not investing enough in unsafe cladding remediation.
Residential Property Developer Tax
The government is launching a Residential Property Developer Tax to help fund cladding removal.
This will tax developers with annual profits of over £25 million at an additional rate of 4%.
The government aims to raise £2 billion over 10 years with the tax.
£65m for vulnerable tenants
The council has been given £65m of funding to support tenants in rent arrears.
It will be down to councils to decide how to spend the money, though the payment is likely to be paid directly to the existing landlord, or a new landlord if the money is being used to support a household to find a new home.
Renters in risk of eviction or homelessness during the winter months have been advised to contact their local council for support.
The government said the funding will mean more tenants and landlords can come to an agreement where the former is in arrears.
Business rates tax cut
Seeing as retail has been so significantly affected by the pandemic, the government decided to hand such businesses a bone in the Budget.
The Chancellor gave retail, hospitality and leisure a 50% business rates discount.
Sunak said: “Any eligible business can claim a discount on their bills of 50%, up to a maximum of £110,000.
“That is a business tax cut worth almost £1.7bn.
“Together with Small Business Rates Relief, this means that over 90% of all retail, hospitality and leisure businesses will see a discount of at least 50%.”
Buy-to-let stamp duty surcharge (the change that didn’t happen)
It’s likely the government changed its mind at the last minute on hiking the stamp duty surcharge for investors and second homeowners.
The Office for Budget Responsibility’s economic and fiscal outlook document, which is published alongside the Chancellor’s speech, incorrectly states that the levy has risen to 4%.
The document said: “A three per cent surcharge on additional property purchases was introduced in April 2016. It has been raised to four per cent in this Budget.”
“HMRC has analysed the response to its introduction and found that it was strong.”
The Chancellor never announced a change in the Autumn Budget, while the Treasury has since confirmed that no alteration was made.
The 3% stamp duty surcharge was first introduced in April 2016 by George Osborne when he was Chancellor.
While Rishi Sunak made some noteworthy policy announcements, there was an element of smoke and mirrors about the Autumn Budget.
Both the cladding and housebuilding announcements were rehashed plans, as the government looks to draw attention away from a Budget which only introduced small measures regarding housing.
Clearly after the year we’ve had it’s a challenge for the government to spend big, so perhaps we shouldn’t be surprised.
Landlords and second homebuyers will be pleased they dodged the bullet of yet another tax hike, though it raises the question of whether the 3% stamp duty surcharge will be increased to 4% down the line.
All in all it wasn’t the most seismic budget for housing, though the green incentives underline how this is becoming a surprisingly big priority for this Conservative government, which has perhaps been influenced by the green energy push happening in the US.