In his opening speech today, the Chancellor reiterated the scale of the impact of Covid -19 on the UK economy. A 25% decrease in national income over two months, the same amount as it has grown in the last 18 years.
This combined with confirmation that the Coronavirus Job Retention scheme will scale down and end in October as planned, means there are some very real concerns for the future of certain jobs, especially of those who are currently furloughed.
Some of the hardest hit areas have been housing and construction, which effectively ground to a halt during lock down. Today, he announced some targeted measures to try and give these industries a much needed kick start.
Stamp Duty Land Tax (SDLT)
Rumours that a cut to SDLT in an attempt to reignite the housing market and construction industry were confirmed as the Chancellor announced a temporary increase in the lower threshold from £125,000 to £500,000. This will come into effect immediately and last until 31 March 2021.
This represents a saving of up to £15,000 for anyone who is not a first time buyer.
Until now first time buyers paid SDLT on properties costing £300,000 or more, with a reduced rate up to £500,000. A lesser saving therefore for them, but depending on the part of the country they a purchasing, many are unlikely to purchase a first home costing more than £300,000.
People buying second homes are currently subject an additional 3% surcharge on top of the ‘standard’ SDLT rates. We presume this temporary increase in the lower rate threshold will also impact these buyers, but this is not yet clear and we await further details of the measure.
We understand this is to apply immediately, but further clarity is required to cover the implications property transactions currently in progress, particularly where people may have exchanged but not completed also taking into account any implications for Land and Buildings Transaction Tax in Wales and Scotland.
The construction industry and its supply chain was of course one of the worst affected by the lock down. Back in June the Prime Minster announced that the government would accelerate over £5bn of spending on infrastructure projects in order to speed up the industry’s recovery. Further measures announced today, now mean that a total of £8.6bn of spending has been brought forward, in an attempt to create new jobs.
Part of these measures include a ‘Construction Talent Retention Scheme’ which aims to support the redeployment of workers at risk of redundancy. It is hoped that this will help retain construction skills and match talented workers to opportunities across the UK.
Another expected announcement was a scheme to generate jobs and reduce carbon emissions by making Britain’s homes more energy efficient.
The Chancellor today pledged over £2 billion to new ‘Green Homes Grant’ voucher scheme, which will cover 2/3rd of the cost (up to £5,000) for energy efficient works to be carried out on homes, or up to £10,000 or 100% of the cost (whichever is lower) for those in low income households.
What was welcome in this announcement, is that is now clear that this will apply to landlords as well as home owners, meaning that those living in rented accommodation will not be left out.
Initial media reports indicated that the type of work these vouchers would cover could be things like insulation, but it will be interesting to see if they go further and include the likes of energy efficient boilers and other ‘non-structural’ items.