Mini Budget: stamp duty cut and £50m social housing decarbonisation pilot

News08 Jul 2020Sarah Williams

The chancellor has confirmed £50m of funding for a social housing decarbonisation pilot and announced the immediate removal of stamp duty land tax (SDLT) on transactions up to £500,000 until next year.

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Chancellor confirms immediate removal of stamp duty land tax on transactions up to £500,000, until 31 March 2021 #ukhousing #socialhousingfinance

Rishi Sunak has confirmed £50m of funding for a social housing decarbonisation pilot #ukhousing #socialhousingfinance

Outlining a series of measures designed to support economic recovery and prevent rising unemployment following several months of government-imposed lockdown, Mr Sunak also unveiled a series of bonuses for employers returning furloughed workers to employment, or creating new jobs and apprenticeships.

Mr Sunak said that the furlough scheme would “wind down flexibly” through to October, with employees paid a bonus of £1,000 per employee returning to work. Conditions concerning minimum payment will apply.

“If you stand by your workers, we will stand by you,” Mr Sunak said.

Mr Sunak confirmed announcements trailed yesterday that the government will invest £3bn in making buildings greener. This includes a £2bn green homes grant for homeowners, who can apply for grants of up to £5,000 per home to support works, while lower-income households would be able to access up to £10,000 per home, Mr Sunak said.

There will be £1bn for improving the energy efficiency of public buildings, while a separate £50m fund will be invested in a pilot to make social homes more energy efficient.

However, the funds fall short of meeting the Conservatives’ manifesto commitment of a £3.8bn Social Housing Decarbonisation Fund over 10 years.

Housing market

Citing a fall in property transactions of 50 per cent in May, with house prices falling for the first time in eight years, Mr Sunak said that housing is a market “we need to be thriving”.

He said: “We need people confident to buy, sell, move and improve, to drive growth and create jobs.”

To offer stimulus to the market, Mr Sunak today announced an immediate cut to SDLT, meaning that property transactions up to an increased threshold of £500,000 will no longer incur the tax.

The removal will be in place until 31 March 2021. Under previous rules, the threshold was £125,000, with first-time buyers eligible for a discount on the first £300,000 in purchases up to £500,000.

The announcement comes a day after in-depth research by Moody’s warned that housing associations’ market sales income would be negatively affected by economic contraction and weakening demand.

The credit ratings agency said: “While we expect rental arrears and care service costs to rise during the pandemic, our estimates show their impact will be less material than that of reduced market sales income.”

However, Moody’s said it expects that strong liquidity and spending flexibility would mean housing associations maintain credit quality in the financial year to 31 March 2021.

“HAs continue to secure funding, reflecting the sector’s underlying strengths. Proactive management and de-risking business plans will mitigate economic risk over the medium term,” the report said.

Mr Sunak also today announced cuts to VAT within the hospitality sector, rather than the blanket cut to the tax that some commentators had earlier anticipated.