Property isn’t top of the news agenda at the moment. And that’s perfectly understandable. There’s a war waging in Ukraine and us Brits are faced with the biggest cost of living crisis since Boris Johnson was a young journalist and Carrie Symonds was in kindergarten.
It was no surprise, therefore, when chancellor Rishi Sunak began his Spring Statement by mentioning events in eastern Europe: sanctions are apparently hitting Vladimir the Invader hard but they’re also slowly impacting our own economy, too. This is due to increased global inflation and supply chain pressures. Gulp.
However, there was some (albeit, limited) good news for us, the international law-obeying citizens of the United Kingdom, yesterday. Income tax will be cut from 20% to 19% by 2024 - a nice little sweetener before the general election - and the national insurance threshold has been raised from £9,600 to £12,570. There were cuts in fuel duty, too.
Whether this is enough to ease the cost of living crisis is very much open to debate, however. Many people on the lowest incomes don’t pay national insurance. Neither do pensioners. It’s a good thing, therefore, that Rishi is also ploughing an extra £500 million into the Household Support Fund. This might not be enough to offset the huge rise in energy prices coming next month, but it’s better than nothing. The political arguments will therefore continue to rage.
Property pass over
When it came to the property sector, however, the Spring Statement didn’t give us much to shout about. And that’s probably no surprise considering the seismic measures announced in previous years. We’ve had Stamp Duty Holiday bonanza, the Mortgage Guarantee Scheme, Help to Buy bonuses, plus a host of other measures, too.
The headline property news this time, however, is that there was no big news. And maybe that’s because we’re already seeing record house prices and strong demand. Expecting yet another Spring Statement fillip was probably greedy.
There was one small (but significant) announcement we’d like to talk about though…
VAT on energy-saving materials abolished
As sustainability aficionados, we’re delighted that the government has abolished VAT on many energy-saving materials for the next five years. The rate was previously set at 5%. Well, now it’s a big fat zero. Nada. You’ll have to pay diddly-squat (tax-wise) to purchase solar panels, insulation, heat pumps, and central heating and hot water system controls for the next five years.
This is a really positive move to make homes more energy-efficient and save homeowners money on their utility bills in the long-run. In fact, the debonair Mr. Sunak reckons that installing solar panels will save the average household £300 a year. That’s not to be sniffed at.
The other thing these measures will eventually do is make us less dependent on imported gas from places that, you know, have a penchant for invading their neighbours. It’s therefore a win-win. Renewables are the future.
Having said that, there’s still plenty more that the government can do, especially since the Green Homes Grant was scrapped a year ago. Although minimum energy-efficiency standards are being developed for the private rental sector, the chancellor hasn’t revealed precisely what those will be.
What we do know with certainty, however, is that those living in more energy efficient properties will pay lower energy bills. Consequently, it’s worth following our top tips to make your home more eco-friendly if you have the spare cash. In the meantime, we wait with bated breath for the government to introduce more measures to propel us towards net zero.
So what does it all mean?
Although the Spring Statement didn’t do much (directly) for the housing sector, it has done significant things for households themselves. And that’s definitely a good thing. After all, it’s not just gas and electricity prices giving the general public a shock; it’s the hike in corporation tax and national insurance as well.
The big worry, of course, is that general inflation and interest rate rises will make homes less affordable in the coming months. Therefore, the strong growth in house prices - something the government loves as much as his chancellor loves a sharp suit - might slow down in the short and medium term. Last year’s rise of 10% seems unsustainable.
The good news, however, is that people will still surely be on the move this year. The market remains buoyant - albeit restrained by a chronic shortage of stock - but with supply currently tight, demand strong, and mortgage rates low (for the time being), it’s still a good time to move home.
To summarise, we’ll leave you with the thoughts of Just Move In ambassador and former chief executive of Propertymark, Mark Hayward:
“Whilst the statement by the chancellor was not heavily weighted towards property, there is the important aspect of sentiment. Does the landlord, seller, buyer, or tenant, feel better or worse?
The cut in fuel duty helps the commuter and the traveller at a time of rising inflation. The increase in the national insurance threshold will somewhat ease the cost of living crisis too, as will the extra money going towards the Household Support Fund.
Most encouraging, however, especially as we move inexorably forward towards the greener world, is the removal of VAT on energy efficient measures. Solar panels and heat pumps will become more and more essential as fossil fuels are phased out. All in all, it’s a step in the right direction but there’s plenty more to do”.
We couldn’t have said it better ourselves.