What the Construction, Property and EV Industry Think of the UK's Spring Budget

Senior industry commentators share their reactions to UK Chancellor of the Exchequer, Jeremy Hunt's, Spring Budget with FM Magazine.

Graham Harle, CEO of Gleeds Worldwide, comments: “As Chancellor Jeremy Hunt resumed his seat after the budget, the false bonhomie masking apprehension on colleagues' faces spoke volumes.

With an election around the corner, if it was supposed to buy the government another term of office, I would imagine many Tory MPs will be ordering the removal van.

This is the core issue that the Chancellor should have been addressing - how to inspire confidence, fan growth and improve productivity.

Rather than tinker around the edges doing things like increasing the VAT registration threshold by a meagre £5K, minimal investment in housing and full lease expensing 'when affordable', the Chancellor should look at the anaemic UK economy as needing a transfusion, not a sticking plaster.

GDP is only predicted to be marginally higher this year at 0.8%, for instance.

This was a budget to stop us bleeding out before the election, not a long-term recovery plan.“

Holiday Let Reform

Roger Mortlock, CPRE chief executive, says: "The government’s plan to scrap tax breaks for short-term lets is a step in the right direction.

But these changes should be applied to all second homes – a major cause of the rural housing affordability crisis. 

"Air-BnB-style short-term lets have led to ghost towns and villages in some parts of the country, driving people out of the communities that depend on them.

A secure and healthy home is a foundation for a decent life and one that many people in rural communities are being denied.  

"Much more is needed to fix a crisis that is tearing the soul out of rural communities.

We call on the government to redefine "affordable" in line with local incomes, not market rates, set and deliver ambitious targets for new, genuinely affordable and social-rent rural housing, and urgently bring forward its new regulations on short-term lets."

Also on holiday let reform and CGT, Kersten Muller, property tax expert and Managing Director at Alvarez & Marsal, comments: “At present furnished holiday lettings benefit from a more generous tax regime allowing them full relief for interest expenses.

For investment properties this relief is restricted.

“There is a question as to whether this will increase supply of affordable rental properties – those used as homes by people – as this is what is needed.

There is a concern that the changes increase costs and, even if the holiday homes are coming to the long-term rental market, hence rents charged.”

“The reduction in the higher rate of capital gains tax on residential property is a partial sweetener for existing investors and second homeowners.

It remains to be seen whether this encourages current owners to sell up.”

On multiple dwellings relief, Muller, adds: “The removal of the multiple dwellings relief was announced largely as an anti-avoidance measure.

Whilst this is understandable, the removal of that relief can again increase costs for owners of residential investment properties with these being passed on to occupiers.”

David Hannah, Group Chairman of Cornerstone Tax, comments: “Multiple Dwellings Relief was first implemented as means to incentivise bulk purchases and provided de velopers with a suitable avenue for delivering low-cost homes.

At a time when demand for affordable housing has skyrocketed, the government should look to create fresh incentives for developers, instead of abolishing old ones.”
 
“With inflation forecast to fall below the two per cent threshold in just two months time, it’s time that the Chancellor pressure the Bank of England to urgently reassess their priorities.

Economies have momentum and the unnecessary continuation of record high interest rates risks further damage to the UK’s struggling housing market. 
 
“Our data reveals that 59 per cent of Brits on their current salary cannot afford to save for a deposit, whilst 54% of Brits claim that their family aren’t able to provide them with enough support for their first step on the housing ladder. 
 
“The Chancellor could have used this opportunity to reform the private rental sector, measures including the abolition of the second home surcharge from rental sector investors and reinstating full relief on mortgage interest payments would have both reduced the costs of purchase, whilst also allowing landlords to freeze, or potentially cut, rents. 

Capital Gains Tax

Commenting on the announced cut to Capital Gains Tax, Victoria Price, Managing Director at Alvarez & Marsal Tax says: “Mr Hunt made an unexpected move to reduce the CGT rate on residential properties sales from 28 per cent to 24 per cent with the Chancellor banking on the fact that a lower rate will stimulate more movement in the property market and ultimately increase taxes. 

"This is a win-win for homeowners and the treasury alike if this thesis plays out.”

Paresh Raja, CEO of Market Financial Solutions, adds: "In his attempts to woo voters before the upcoming election, the Chancellor missed a trick by not bringing forward more meaningful, positive policies for the property market.

But we knew that was likely to be the case. 

"Cutting property CGT rates will be welcomed in some quarters.

But elsewhere, after years of tightening regulation in the buy-to-let market, the Government has indeed now moved to put the squeeze on holiday lets.

Ensuring there are ample properties available for local homebuyers in tourist hotspots makes sense, but it is regrettable that the solution is always to target investors and penalise landlords rather than boosting supply through greater investment into housebuilding.

"We also have to be alert to the fact that scrapping non-dom tax rules risks damaging the appeal of the prime London property market among international investors.

Time will tell how plans for a shorter-term non-dom-style tax status might take shape, but given Labour was already pushing to scap non-dom status, we should not expect much relaxation in this reform. 

“That there was so little by way of stamp duty reforms, housebuilding commitments or ways of incentivising landlords to invest in their properties - particularly for energy efficiency purposes - was disappointing.

It was telling that Hunt praised the Government for having overseen the building of 1 million new homes in this parliament, even though this figure falls well short of what is needed in a five-year period.

Meanwhile, suggestions of new 99% mortgages did not come to fruition. 

“Ultimately, after two years of rising interest rates, today's Budget would have been an opportune moment to bring about a string of policies and reforms to boost the property market.

It feels like a missed opportunity."

New Investment Projects

Commenting on the announcement of new invest in projects in Sheffield, Blackpool and Liverpool as well as £242m in Barking Riverside and Canary Wharf, Daniel Austin, CEO and co-founder at ASK Partners, says: “It is positive that Jeremy Hunt is putting investment into new homes at the top of the agenda.

Focusing investment into high growth business facilities such as labs and the housing needed to attract staff into these roles is crucial for economic growth.

However, affordability is going to remain an issue until we have increased supply by much more than 300,000 homes per year.”

Electric Vehicles

Adam Hall, Director at Drax Electric Vehicles expresses disappointment at the Chancellor's Spring Budget, saying: “Whilst we weren’t anticipating major overhauls from the Chancellor, the Budget missed significant policies to help drivers and businesses. 

"The Chancellor’s announcement of a continued fuel duty reduction for the next year didn’t shock many of us.

With the need to curb inflation, it has remained a crucial tool since its introduction. 

"However, businesses and drivers will be disappointed to hear that the Chancellor hasn’t listened to calls for public charging VAT cuts.

Decreasing from 20% to 5% would’ve been a helpful step in the right direction for current and soon-to-be EV owners.

We would have liked to see this support from the government to increase the affordability of EV charging across the UK, especially for those who can't plug in at home or don't have access to charging facilities at work.

"While investment packages in cutting-edge technology and manufacturing is valuable, there must be greater emphasis and understanding of the challenges that EV drivers and businesses currently face.

With the launch of the Zero Emissions Van Plan, presented to MPs last week, many would’ve expected further measures to be set that acknowledged electric van concerns.