Chancellor Philip Hammond’s first spring Budget, with the focus on improving social care, pushing forward the potential of the economy and improving prospects for the regions with an injection of cash for infrastructure outside of London.
The investment of £2 billion for social care services across England was largely expected, due to the fact the government has been repeatedly warned about the potential for the system collapsing in recent times, but the chancellor has been criticised for his moves to increase National Insurance contributions for self-employed people, with critics claiming it has “broken the Conservative manifesto”.
The Scottish, Welsh and Northern Irish leaders were also handed a boost with the announcement that the Scottish and Welsh governments will be granted £350 million and £200 million in additional funding each, while the Northern Ireland Executive will receive a little under £120 million.
Here, we take a look at a few of the most important elements of the Budget for the investment and property markets.
For some years now, commuter towns and regional cities have been growing in prominence, thanks to the increased movement of companies away from London to find more affordable ways to work and new skilled workforces.
However, in order for this to continue to grow across the likes of Manchester, Liverpool, Leeds and Birmingham, among others, there needs to be more investment to make sure they have the infrastructure to cope with growth. This is something that the chancellor addressed in his Budget.
He said that moving forward, the government will spend more than £100 million on transport links across the regions, with the north of England coming out as the real winner.
The region will welcome £90 million in order to address what the chancellor called “pinch points” on roads, helping alleviate congestion in cities that are becoming busier and busier all the time.
The Midlands will also receive investment for transport networks on a smaller scale, with the chancellor committing to spending some £23 million on the region in the year ahead.
To help with further growth in the business world, Mr Hammond also pledged to help struggling companies nationwide.
He unveiled a £300m “discretionary fund” to be used by local authorities to help firms that are facing problems, as well as a £50-per-month cap on business rate increases for firms dealing with the loss of small business relief.
One of the major concerns heading into this Budget announcement was the upcoming Brexit negotiations the UK will be taking part in after the triggering of Article 50. Mr Hammond sought to aleviate fears around this issue, saying the Budget 2017 provides a “strong and stable” platform from which to head into negotiations, and adding that the UK “continued to confound the commentators with robust growth”.
The latest Office for Budget Responsibility (OBR) forecasts were unveiled as part of the Budget 2017, with the data showing better than predicted outlooks for the UK moving forward.
For 2017, the OBR has improved its predictions, with the UK economy expected to grow by two per cent rather than the 1.4 per cent previously forecast. This is then expected to fall to 1.6 per cent next year, before rising again to two per cent in 2019.
Stamp Duty let down
While there were positives to be taken away from the Budget 2017, it wasn’t all good news, and the property investment market in particular was left somewhat surprised, and very disappointed, to have been left out of the announcement altogether.
It had seemed in recent months that the government was paying more attention to the importance of the private rented sector for addressing shortages in housing, which had meant many landlords and investors were feeling positive about the potential for changes to taxation of property purchases. At present, anyone investing in rental homes pays a three per cent levy over and above the standard charge when billed for Stamp Duty, but there had been calls for the government to abolish this in order to promote investment and boost rental stock.
Many had also hoped that the government would revisit tax relief changes set to come into effect next month, which are set to make it more expensive for those with money in rental property. However, in what experts are calling a “first”, the property market was shocked to receive not even a passing mention in the announcement, which meant no movement from the government to make it easier to invest.
There are now fears about what this will mean for the rental market, with experts including Steve Bolton, founder of Platinum Property Partners, saying that the government’s inability to see the positive impact the buy-to-let sector has on the nation could punish not only investors, but also tenants, in the months ahead.
“There is a fundamental misunderstanding of how the buy-to-let sector operates at the heart of this policy and it also completely contradicts the importance placed on the rental sector in the government’s recent housing white paper,” he said, while James Davis, chief executive of online lettings agency, Upad, added that it’s now highly likely that the government’s failure to act will mean tenants paying more for their rent in months and years to come.