Chancellor Rishi Sunak has delivered his first Budget and there is disappointment that, despite prominent campaigning from industry experts, there have been no tweaks to VAT to support the renovating of existing homes.
Prior to the Budget, house builders and industry leaders had called for VAT cuts on home repair and renovation, which the Federation of Master Builders (FMB) said would help to boost economic growth and reduce costs for those renovating a house.
In data released earlier this week, the FMB revealed that 212 out of 357 small to medium-sized building companies supported VAT cuts.
Responding to the Budget, Brian Berry, chief executive of the FMB said, “The Chancellor has missed an important opportunity to announce interventions that would support the sustainable, long-term recovery construction needs.”
“The autumn Budget must include measures to cut VAT on repair and renovation, and a National Retrofit Strategy to promote decarbonisation and create jobs and growth.”
Hew Edgar, head of RICS UK Government Relations & City Strategy, added: “We’re disappointed the Chancellor didn’t support the property industry to retrofit thousands of buildings, turning them into places people would have loved to call home.”
Chancellor Makes Homebuilding Pledge
One of Mr Sunak’s standout announcements was to pledge an extra £9.5bn, totalling £12bn, for the Affordable Homes Program from 2021-22. This will be used to build 70,000 new homes in areas of need. Mr Sunak described it as the biggest cash injection in affordable housing in a decade.
The Budget also re-emphasised the government’s commitment to build at least one million new homes by the end of the Parliament, and an average of 300,000 homes a year by the mid-2020s.
“Today I can make good our promise to extend the Affordable Homes Programme with a new, multi-year settlement of £12bn,” the chancellor said.
The news was positively received by Tom Slingsby, chief executive of property developer Southern Grove. He said: “This cash boost for affordable homes will underpin building for many years to come and is a declaration of war on a housing crisis that isn’t going away.
“Only sufficient provision of affordable homes in the right areas can prevent the sort of social inconsistencies that appear when high property prices put key areas of UK cities off limits to younger workers and their families.”
Despite the investment, Berry reflected that a lack of additional support for small and medium-sized (SME) homebuilders could jeopardise this target.
“Master Builders are facing major barriers finding land, accessing finance and skilled workers – these will all need addressing if we are to build 300,000 homes a year,” said Berry.
Planning System Overhaul
The chancellor also promised to overhaul the planning system, with housing secretary Robert Jenrick expected to announce reforms on Thursday.
The proposed reforms will bring the planning system “into the 21st century”, according to Mr Sunak, which will be followed by a planning white paper later this year.
No Reference to Self Build
While the Conservative Party’s General Election manifesto directly referenced self build, promising to help first-time self builders access the Help to Buy scheme using 5% deposit mortgages, this pledge has yet to be fleshed out.
And today’s Budget leaves us with no extra information. While the initial reference to self build last December was considered significant for the sector, there is no elaboration of this pledge or how it will be rolled out.
However, Andrew Baddeley-Chappell, chief executive of the National Custom and Self Build Association (NaCSBA), says that while the Budget negates self builders, it is not all doom and gloom.
Baddeley-Chappell told Homebuilding & Renovating: “Overall it is always nice to hear your sector referenced, but no news does not mean bad news. There is nothing to complain about for us in this budget so it is a really a case of wait and see – with the promise of more to make it easier to build that we hope we will be a bigger part of.”