Summer economic update – a shot in the arm for real estate and construction
As part of the continuing government response to the Coronavirus, the Chancellor has doubled down on his recent unprecedented support for the UK economy today in a special summer economic update. The real estate and construction sector has been one of the hardest hit – landlords, occupiers and service providers have all borne a lot of the financial brunt of the lockdown.
Today, a raft of measures have been announced which, it is hoped, will help the sector to rebound. The key points are as follows:
Stamp duty land tax
As expected, the level at which SDLT starts to bite for owner occupiers has been raised from £125,000 to £500,000. This measure is effective immediately and lasts until 31 March 2021. The objective is clearly to get the property market moving again and restart all of the associated economic activity, which goes with the buying, and selling of houses. Interestingly, those acquiring second properties or buy-to-let landlords will also benefit. They will still pay the additional 3% levy introduced a couple of years ago, but that is it up to £500,000. The desire to get the market moving has overridden the historic drive to penalise smaller investors in the buy-to-let sector.
VAT cut for hospitality, entertainment and accommodation businesses from 20% to 5% will commence next Wednesday (15 July) and last for six months. The aim is to drive consumption in businesses that rely heavily on fixed real estate as trading venues. Clearly, this is good news for traders but will also be welcome news to their landlords, as increased revenue will hopefully equate to an increased ability to pay rent.
Furlough and jobs
The colossal spend on the job retention scheme is scheduled to wind down over the coming months. There will be no extension to the current arrangements, but for everyone returning from furlough and staying in employment until the end of January 2021, their employer will receive a grant of £1,000. In addition, a further £2 billion will be spent on a ‘kickstarter’ campaign, which will see significant funding made available to employers who create entry-level jobs for 16-24 year olds.
The government will spend £2 billion on grants for homeowners and landlords to improve the energy efficiency of their properties. The detail is still coming through but clearly this work will need to be undertaken by those engaged in the construction industry and sector – a welcome boost to new business in this area.
New jobs and housing
Following previously trailed announcements, the government will support construction industry workers at risk of redundancy by helping to enhance and match skills to opportunities through the construction talent retention scheme. In addition, measures will be brought forward to free up land, encourage residential developers and unlock planning.