Is this the post-pandemic era? That was certainly the rhetoric surrounding the latest Budget announcement, revealed by Chancellor Rishi Sunak this week.
While that sentiment might seem a little premature to some, from a financial perspective it certainly makes sense to think about future prosperity and how things might recover from the dearth of optimism we’ve had to endure in recent times because of the pandemic.
Sunak has spoken of a desire to start ‘leveling up’ the economy in the post-pandemic age, making this one of the most eagerly anticipated announcements for years.
So what are the main takeaways from the Budget 2021 announcement, and how might they impact the mortgage market and world of contractors and freelancers? The Roots Mortgages team has taken a look.
Significant investment in new housing
One of the major headlines when it came to the housing market was the figure set aside to support the development of new housing.
The 2021 budget included the announcement that £24 billion had been earmarked for housing. Of this £24 billion, just under half has been allocated for the creation of affordable housing. Around £11.5 billion is set to be pumped into the development of 180,000 affordable homes.
Brownfield sites are to be targeted as part of the development plans. These are sites that have previously been used for industrial purposes for example, but are currently not in use. This land presents the opportunity to create plenty of new housing developments and enable more and more people to secure a home of their own.
Given the various schemes and initiatives around enabling people to get onto the property ladder, particularly involving newbuilds, this is an interesting commitment from the government. It will be interesting to see how this development plan progresses in the post-pandemic age.
A growing economy?
The wider economy, including the jobs market, took a significant and understandable hit during the Covid-19 pandemic. The budget announcement was a chance to see how things were shaping up and how the government would be orchestrating the recovery efforts.
An initial observation is that inflation is high at present, with a rate of 3.1% recorded in September 2021. This is likely to increase to an average of 4% in the next year according to the Office for Budget Responsibility.
The budget also included forecasts indicating that the UK economy could return to pre-pandemic levels by 2022, while annual growth is set to resurge. This has been predicted to rebound by 6.5% in the remainder of 2021, with a rate of 6% anticipated in 2022.
A little underwhelming on the property front?
Some within the industry had expected announcements around property taxes, which didn’t get a mention in the budget.
There are varying schools of thought around this. They say what you don’t know can’t hurt you, but the lack of news in this area could be interpreted as ignoring the ongoing housing crisis in the UK, despite the promised investment in new builds.
Whether or not a conversation around the best use of existing property is something the current government is concerned with or keen to address seems to still be up in the air.
A lack of stamp duty news, which was famously cut completely during the pandemic, was also a concern. This is generally seen to be an area that needs to be addressed and reformed, particularly for people later in their property buying journey.
So it depends on whether your glass is half full or half empty in terms of how you interpret the budget announcement from the perspective of the housing industry. Many had expected the budget to shed some light on these talking points, but in general that hasn’t happened.
That all means that for now, the status quo will continue. How long that will stay the case, of course, remains to be seen.
