Chancellor's Summer Statement: support announced for housing and hospitality - BLM Property Partner Stephen Crook responds
Stephen Crook, Commercial Property Partner at BLM comments:
The Chancellor has announced a number of new measures today aimed at the housing market and hospitality industries.
- Increase of Stamp Duty Threshold from £125,000 to £500,000
This measure which applies to residential property in England and Northern Ireland is proposed to take effect immediately and last until 31 March 2021. The housing market has suffered during the lock-down with reports that transactions in May were 50% lower than the previous year and UK house prices fell for the first time since 2012. There have been signs of recovery but it hoped that this cut will stimulate the market and the associated spending which comes with house moves. There were initial fears that the measure would not start until October which could have stagnated rather than stimulated the industry. By starting it immediately this has been averted but it is more likely to assist sellers and those already in the housing market rather than first time buyers. There are already Stamp Duty exemptions for first time buyers and they still face great difficulties in obtaining mortgages particularly with high loan to value ratios. However, it is still a positive move and coupled with the low interest rates it should provide some much needed stimulus to the housing market. For residential developers in the commercial property sector, this news should significantly boost enquiries and transactions.
- Temporary cut to VAT for hospitality from 20% to 5%
There will be a temporary cut to VAT on food, accommodation and attractions from 15 July to 12 January 2021. The hospitality industry has probably suffered the most during lock-down. According to government figures 80% of firms in hospitality and leisure temporarily ceased trading in April. They still face substantial rental payments and difficult discussions with landlords as well as additional costs to pay for social distancing measures, reduced capacity and a fall in customers. This together with the “Eat out to Help Out” scheme and the job retention bonus are designed to prevent widespread redundancies and insolvencies. However, neither scheme includes alcoholic drinks and it is still likely to be long road ahead for the sector with many businesses unlikely to survive.
- “Eat out to Help Out”
This will allow a government backed discount scheme of 50% up to £10 a head in August for eat-in meals taken between a Monday and a Wednesday in participating restaurants. It remains to be seen how this will work in practice and if it will be welcomed by the industry as more than just a publicity stunt.
- Green Homes Grant
There was also an announcement of a green homes grant of £2 for every £1 (up to £5,000) spent on every efficiency measures such as insulation (and up to £10,000 fully funded for low income households). This is aimed at stimulating refurbishment works as well as meeting the targets for reducing carbon emissions. Any move to assist the green economy should be welcomed but it is likely to be seen as little more than a good start in tackling the required reductions.
It remains to be seen whether these measures will have the desired affect and what further support will be required in the autumn statement in October."
Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.