By and large the property market has done quite well out of the exchequer in the past 18 months.
After what many would consider to be an unnecessarily harsh few years prior, it felt like the government was starting to come round to the idea that the property market is an essential plank in a robust and thriving UK economy.
A number of tax incentives and government schemes were introduced – some in response to the pandemic – that stimulated an already fizzing market across the country.
Having said that, although it was a bumper year for landlords and property investors, 2020 was a historically expensive year for the treasury who borrowed more money than at any other time since World War 2.
The chancellor now has the unenviable challenge of keeping the economy going and on track for recovery, whilst also looking to balance the books and repay some of that debt that has accumulated thanks to propping up the economy through last year’s restrictions.
That leaves an intriguing dilemma which many will be awaiting with anticipation. With just a few weeks until the announcement – 3rd March is earmarked – many are now wondering what Rishi Sunak is likely to announce, so here’s what to look out for.
The challenges
As it stands it would be fair to say that the government will have three main issues to address.
Firstly, how do they begin to pay those debts off and how is it paid for? Secondly, where will the money come from to continue supporting industries affected into the summer as restrictions are eased cautiously? And finally, how does the government continue this spectacular run in the property market that has been one of the central success stories of the UK’s economic resilience?
The big question for most will be whether Sunak intends to raise taxes, however, that presents its own tricky situation as the Tory manifesto of 2019 promised no rises to VAT, income tax, or National Insurance.
Of course, the chancellor could reasonably argue that this promise was made before a global pandemic, however, it could be a tough sell.
In all likelihood, it’s probable that Sunak will announce tax rises outside of those three main areas and will mix this with a cut in government spending in other areas, having already frozen the pay of at least 1.3 million public sector workers.
Property
Recent figures by the Office for National Statistic (ONS) show that house prices grew by an astonishing 8.5% across 2020, and all indications are that there will be another good year in 2021.
That raises the question of whether the chancellor will tamper with a winning formula or leave things to carry on as they are.
Recent reports have stated that in an unexpected turn of events, Rishi Sunak is set to move the stamp duty holiday deadline from the 31st of March to the end of June following pleas from numerous property professionals and economists.
According to Rightmove, this change could result in an additional 300,000 property transactions in England benefiting from the tax saving, potentially saving a cumulative £1.75bn.
Investors and landlords will know that things are going very well at the moment and there’s no reason to believe that it won’t continue into the rest of this year.
Now, many are saying, is actually the time to invest further, and that seems to be the message that will also come from the treasury too.
