PropTech sector gives a thumbs down to lacklustre Budget

The PropTech sector has mostly agreed with the rest of the industry in its view on yesterday’s Budget - that it was lacklustre and a missed opportunity.

Yesterday’s financial announcements by Chancellor Jeremy Hunt - like to be the last ones by the government before an election - included confirmation that tax concessions for owners of furnished properties let out as holiday accommodation would end, in a bid to remove the incentive for landlords to offer short-term holiday lets rather than longer-term homes. This will take effect from April 2025.

To great surprise the higher rate of Capital Gains Tax was reduced from 28 to 24 per cent: this is a bid to encourage landlords and second homeowners to sell their properties, making more available for first time buyers. 

However the Chancellor also abolished Multiple Dwellings Relief, although transactions with contracts that were exchanged on or before yesterday - March 6 - will continue to benefit from the relief regardless of when they complete, as will any other purchases that are completed before June 1.

Richard Donnell, executive director at Zoopla, comments: “The Budget marks another missed opportunity to take action on boosting supply and mortgage availability in the housing market. The consensus is that the country needs more new homes. Supply has increased but this has stalled. There is a need for widespread reform of the planning system to encourage supply. More funding is needed for social and affordable homes, and housing infrastructure investment to unlock supply.

“The Government should also look to support the emergence of a long-term fixed rate mortgage market as a matter of urgency. This will help more young people with smaller deposits access home ownership - particularly in southern England where deposit size is the biggest barrier to getting on the housing ladder.”

“Another missed opportunity is the decision not to make the £625,000 threshold for first-time buyer relief permanent. This means 30 per cent more first-time buyers will be liable to pay full stamp duty from March next year.”

Meanwhile rental sector supplier PayProp says: “The measures announced today will do little to impact the overall number of properties across the UK. Without concrete action to boost the number of both social and privately rented properties throughout England, Scotland, Wales and Northern Ireland, rents will remain high.

“These measures are not likely to bring about the investment needed in new Private Rental Sector stock to reduce rents in the PRS, and the lack of new measures to help landlords or tenants with their costs or tax liability could be remembered at the ballot box.”

Another rental PropTech company - Goodlord - was also disappointed. Managing director Oli Sherlock says:  “As predicted, this Budget didn’t deliver much in the way of housing reform. The most surprising announcement, and one that wasn’t leaked beforehand, is that the higher rate of property Capital Gains Tax will reduce from 28 to 24 per cent. This will be welcome news for landlords, but could have the adverse effect of encouraging those on the fence to sell-up.” 

And Gary Wright, chief executive of deposit alternative service Flatfair, comments: “Hard-pressed tenants will remain hard-pressed despite the National Insurance cut …. The reduction in Capital Gains Tax may encourage some landlords to sell up and leave the sector altogether, putting even more pressure on already over-stretched supply. The lack of support for renters and landlords in the budget combined with the lack of available stock may continue to force rent prices up and put upward pressure on deposit payments which many struggle to find.”

The only PropTech player with a good word to say appears to be The ValPal Network - part of Angels Media, publisher of Today industry titles - whose director Craig Vile says: “While some in the industry had probably hoped for more direct help for the housing sector, the cut in National Insurance from 10 to eight per cent will be warmly welcomed. It will help some first-time buyers overcome lender affordability criteria.

“And with inflation coming down and the prospect of lower interest rates to come, we may well see greater confidence in the market and some of that pent up demand begin to flow through. Aside from any specific measures to drive transactions, the outlook for the economy is brighter and that should give us all some optimism as we head into the Spring.”