The housing market has been severely affected by the pandemic. In May, property transactions fell by 50% (compared to May 2019) and house prices dropped for the first time in almost 8 years. Since the easing of lockdown, however, we have started to see an increase in activity. In a bid to further reinvigorate the property and construction sector, it was one of the key areas of focus for the Chancellor during today’s Summer economic update. So what’s changed?
Stamp duty
Effective as of 8 July, the nil rate band of Stamp Duty Land Tax relating to residential property will be increased from £125,000 to £500,000. This temporary increase will last until 31 March 2021.
Buyers looking to purchase second homes or buy-to-let properties are eligible to benefit, but will still have to pay the 3% extra duty due on the entire price.
The stamp duty holiday in England and Northern Ireland is expected to cost the Treasury an estimated £3.8 billion.
Green homes scheme
The government announced £2 billion of green home grants to help unlock work for builders and tradespeople. Landlords and homeowners will be able to claim vouchers to pay for at least two-thirds of green improvements such as loft, wall and floor insulation.
A £1 billion programme will also aim to make public buildings greener, such as schools and hospitals.
Building projects
To stimulate building projects, an additional £5.8 billion will be spent on ‘shovel-ready’ construction, including:
- £1.5 billion for hospital maintenance and upgrades
- £100 million for the local roads network
- over £1 billion to start to rebuild schools in the worst condition in England, plus £760 million this year for key maintenance work on schools and FE colleges
- £1 billion for local projects to boost local economic recovery in the places that need it most
- £142 million for court maintenance to repair around 100 courts across England.
Apprenticeships and traineeships
Apprenticeships and traineeships are commonplace in the property sector. In a bid to protect young people most at risk of long-term unemployment, the government plans to scale-up traineeships by paying employers £1,000 to take on trainees. Apprenticeships will also be incentivised, with businesses receiving a £2,000 bonus for apprentices under 25 or £1,500 for those 25 and over, from 1st August 2020 to 31st January 2021.
In addition, the Kickstart scheme has been launched to help create new jobs for 16-24 year olds currently receiving Universal Credit. The scheme will pay young people’s wages for six months, plus an amount to cover overheads.
If you have a question for Harold Sharp’s Proptech team, please contact us.