Chancellor of the Exchequer Rishi Sunak has unveiled a coronavirus jobs and economy recovery plan in a mini-Budget 2020. Here, Catherine Williams, head of Shoosmiths’ living sector and partner and Nick Iliff, co-head of infrastructure and energy sector discuss some of the key announcements and Stephen Dawson, head of financial services provides a warning on spending.
Across our Living sector at Shoosmiths, we have been eagerly anticipating today’s economic update. It is an enormous relief to the housebuilding industry, and property industry generally, that the rumoured deferred stamp duty land tax (SDLT) relief has not materialised and that the extension of the nil rate band to £500,000 is effective immediately.
The Chancellor has confirmed his commitment to re-energising the residential property market which is fantastic news for anyone intending to purchase their main property for under £500,000, as they will now temporarily not have to pay any stamp duty. This could save residential buyers up to £15,000 as a temporary measure until 31 March 2021. Any buyers contemplating buying a residential property in this price range now have a great opportunity to make a significant saving. I consider many previously tentative prospective buyers or movers will be encouraged to take advantage of this concession.
Housebuilders will be boosted by the news as they continue to ramp up their construction programme for new dwellings and convert the already high reservation rates into exchanges and completions. Our June plot sales national reservation figures at Shoosmiths were already exceeding the levels we hit last June and the announcement will no doubt mean a busy summer for us in this area. In anticipation, we have already called back pretty much all of our full plots team colleagues from furlough leave.
Further, the Chancellor’s commitment to a green recovery was boosted with a government contribution to energy efficient homes. Home insulation vouchers will be available which cover at least two-thirds of the cost up to £5,000 per household. For low income households the cap is higher at £10,000 per household.
These announcements collectively reinforce the government’s “Build, Build, Build” strategy and the government must be hoping that savings made on SDLT will convert into more disposable cash being spent in the wider economy on home improvements, meals out, and leisure.
Rishi Sunak’s economic update has given us – again - great cause for optimism across the UK infrastructure and energy sectors. Reinforcing the promises of the March budget and the hard commitment to investment in vital parts of our economy, not least those parts of our economy which will deliver permanent green and sustainable growth: houses, roads, schools, hospitals and high streets. It is more than £80 billion of capital funding and, as announced last week by the Prime Minister, £5 billion of accelerated investment.
It is brilliant to hear that this will support energy efficiency in social housing, through support for the construction sector both through training, employment with direct and indirect, temporary and long-term boosts to the housing market and improvement of our housing stock.
We look forward to engaging across all our business areas including our infrastructure and energy sector in supporting the return to a green and growing economy which re-echoes the optimism of today’s announcements.
This strikes me as a creative and far reaching budget announcement, aimed at providing a broad reaching stimulus for the UK economy. It feels like a positive approach, benefitting many, if not all - VAT cuts, stamp duty freeze, job retention and creation and support for hospitality being four good examples. This takes the value of financial support to the UK economy to more than £190 billion. My view as head of the financial services sector at Shoosmiths is that job retention and creation is going to be one of the most influential factors in the next few months, fuelling spending or, alternatively, crystallising spending austerity.
You can read more now here from us on the government’s plans on jobs to secure the UK’s economic recovery from coronavirus.