As expected, the cost of living crisis was the major theme underlying Chancellor Rishi Sunak’s Spring Statement, with some recording breaking announcements made but many still saying it hasn’t gone far enough in the face of soaring inflation rates and energy bills. No huge announcements were made regarding the property sector, but it is clear the industry is concerned about the accessibility of the property ladder as house prices continue to rise to match inflation rates.
Read on to find out more about the impact this may have on the property sector.
Energy efficiency measures
As part of his three pronged approach to tackling energy prices, Rishi Sunak announced that he will be scrapping VAT on home energy-saving measures, such as insulation, solar panels and heat pumps for the next five years.
Edward Heaton, Founder and Managing Partner at buying agents, Heaton & Partners, said: “The news to scrap VAT on energy efficiency measures is welcome, especially to those running old country houses which are often the most difficult to make truly efficient because of their construction. Homebuyers have never been so acutely aware of their energy consumption, often wanting to know that renewables can be incorporated into the running of the building to keep their carbon footprint, not to mention annual costs, low. Anything that encourages people to pursue a greener path is a definite positive. Long may this transition last! It will be the practical conservation of many a historic house that will allow our architectural legacies to thrive. The move towards self-sufficiency will gather pace in the coming years, from growing your own to installing storage power facilities that provide for breaks in the power supply.”
Kush Rawal, Director of Residential Investment at SO Resi, added: ““As we endure the greatest energy crisis since the 1970s, there has never been a more pertinent reason to take action and accelerate our sustainability journey, particularly in the housing and construction sector. The built environment currently contributes to 40% of the UK’s carbon emissions, meaning the housing sector clearly has a big part to play in driving down carbon emissions and moving towards more sustainable methods of construction and environmentally friendly homes.”
Tackling the cost of living crisis
The chancellor announced multiple measures to support those suffering most as a result of the cost-of-living crisis, including cutting fuel duty by 5p a litre for the next year, raising the National Insurance threshold by £3,000 meaning people must earn over £12,570 a year before they are eligible to pay income tax, and cutting the basic rate of income tax from 20% to 19% – the first cut of this nature in 16 years.
Kush Rawal, further comments: “There has never been a greater need for more affordable homes, with a cost of living crisis about to hit compounded with high interest rates and rising house prices – yet we are faced with a crippling housing stock shortage. Immediate investment is needed to deliver more affordable homes at all levels, including those available through shared ownership. Whilst the initial funding set out within the Affordable Homes Programme is a welcome step, it does not go nearly far enough, with the CIH stating the programme must increase its annual value by 28% to help address some of the housing shortages we are seeing.”
Christopher Heath, Managing Director at Cube Homes, said: “As expected, the cost of living dominated the Chancellor’s statement as costs in every aspect of life are set to rise over the coming months. Whilst it is positive to see some support provided, this doesn’t go nearly far enough to tackle the spiralling costs of living and the bottom line is that many people will be left poorer. Whilst you would expect to see a drop in prices resulting from lower spending power, I don’t expect to see this happening. It is likely, and has already been noted in the market, that sales volume will reduce as buyers either cancel or delay moving house due to uncertainty on how rising costs may impact their wages.”
Simon Cox, Founder and Managing Director at Land Agent Walter Cooper, adds: “The stakes are so much higher since the last Budget, now facing giant questions on hyper-inflation, fuel poverty and a cost-living-crisis that will hit young people and the vulnerable disproportionately harder. Bearing in mind that most people’s highest outgoing is either their mortgage or their monthly rent, housing is a huge issue that could help affordability long term if addressed properly. To address the cost-of-living is to address the planning policy for real long term change in the UK’s living standards.”
Lynda Clark, CEO of First Time Buyer Group, comments: “We know that young people, in particular, are increasingly likely to suffer as a result of economic hardship, and it’s shocking that although the number of first time buyers buying a property has increased in the last few years, saving for the deposit remains the biggest challenge. Escalating living costs and rising inflation will inevitably squeeze household finances with many billpayers wisely budgeting ahead for eye-watering price increases rather than building their savings.”
Santhosh Gowda, Chairman of Strawberry Star, said: “Whilst the most vulnerable in society have been rightly given financial assistance by the Chancellor, it’s important to remember that the cost of living will hit millennials incredibly hard. With starting salaries, higher student debt, increased taxes and little opportunity to save as rents hit record levels, getting on the ladder will feel further out of reach than it ever has done before.”
Despite these measures the general consensus appears to be that the Chancellor has not gone far enough to tackle the ongoing issues faced by the majority of the population. But once implemented will today’s announcements have a genuine impact on the UK economy? I guess we’ll have to wait and see. To find out how PR could help your voice cut through the crowd, get in touch via firstname.lastname@example.org