“We are the builders”, claimed George Osborne as he announced plans to improve road infrastructure and construct major rail routes across London and the north in his Budget today.
In his statement, the chancellor gave the capital’s Crossrail 2 the go-ahead with the £80 million project connecting South West and North East London.
He also pledged £60 million to the HS3 rail link between Manchester and Leeds in order to cut journey times between the two cities and promised to invest an extra £161 million to upgrade the M62 to a four-lane motorway. Another £75 million goes to improving other road links across the north.
Flood defence spending will be increased by £700m and funded by a 0.5 percentage point increase in the insurance premium tax.
But despite £100 million funding to tackle homelessness, Osborne failed to tackle the UK’s housing crisis.
Instead he announced an extension to the planned stamp duty hike on purchases of additional property to include those who buy more than 15 properties and an extra three per cent levy will be applied to standard stamp duty rates on second homes.
The launch of a new lifetime ISA in 2017 was announced to help those aged under 40 buy a home or save for a pension where savers will receive a 25 per cent bonus from the Government on deposits of up to £4,000 a year.
Senior figures and organisations give us their thoughts on George Osborne’s Budget 2016 speech:
Elizabeth Bradley, head of the corporate tax team at international law firm Berwin Leighton Paisner, said: “Much of the British property industry will be very disappointed with today’s Budget changes. The property sector is effectively being used to placate the Government’s back benchers.
“The Chancellor has acknowledged the need to build more homes but the extension of the extra SDLT rate on buy-to-let to large investors will discourage investment in the private rented sector.
“Overall, increased tax costs will not be offset by the reduction in corporation tax rates to 17% by 2020.”
Jonathan Stephens, managing director of Surrenden Invest, a property consultancy that focuses on high-yielding buy-to-let investments said:
“Today’s announcements by the chancellor will have come as no real surprise to those looking to buy an investment property in coming months.
“George Osborne has maintained his earlier pledge on Stamp Duty, holding strong on the changes already announced, which in turn means that those investors with their fingers on the pulse will not have experienced any kind of real shock to the system today.
“What it does mean, however, is that we are set to see an ever-increasing focus on the ‘Northern Powerhouse’ as the location of choice for investment properties.
“This Government focus on the North West was highlighted further still today with the announcement of new road improvements in the region, along with a new tunnel linking Sheffield with Manchester.
“Giving the green light to the HS3 Manchester to Leeds line will also massively grow investment prospects in the Northern Powerhouse, improving transport links and high-speed travel.
“This does mean that the focus is very much moving away from the capital.
“Having ‘London’ at the end of your address should be a license to print money but the current oversupply of new build property, combined with the turmoil in the overseas market, means that the London market overall is cooling – and fast. In fact, I predict that by Christmas new build stock in London will be down by 50 per cent.
“Yet this is London as a whole. There are still areas, like Ilford for example, that remain undervalued and therefore savvy investors still keen to buy in the city should look to such locations that offer low entry points and decent rental income, combined with positive future Crossrail-impacted price growth.
“Overall, I would say that this budget has confirmed that there is no better time to look north, however, with the dream buy-to-let conditions created for the Northern Powerhouse.”
Charles Clarke, partner in the Planning and Infrastructure department at leading law firm Bircham Dyson Bell gave his view on the transport upgrades.
“The government has set some challenging targets for promoters of major projects to get funding from sources other than direct contributions from central government, especially Transport for London, who had their resource grant cut in last year’s autumn statement.
“Government has now invited TfL to bring forward proposals for financing infrastructure projects. We expect to see some innovative funding solutions coming forward for future projects, and hope Government will be receptive to them, if it wants to see these projects delivered.”
Chris Wood, CEO of Develop Training Limited (DTL), one of the UK’s leading training specialists for the water industry and energy sector welcomed the £700 million increase for flood defences.
“It is clear many councils need to urgently review their ability to manage flood risk. Announcements about investment in infrastructure are also welcome.
“However, in light of the chronic skills shortage in the construction industry, Britain will struggle to cope with issues such as flooding and to keep our existing infrastructure intact.
“The Chancellor’s support for businesses, including a cut in the headline rate of corporation tax is encouraging.
“We would have liked to have seen in the Budget headlines something about how the Government intends to address the issue of training and development in mainstream industrial sectors, possibly through enhanced funding opportunities or other incentives.
“More importantly, the Government also needs to explain how it will effectively, and financially, hold to account the ultimate owners of those privatised utility companies to provide for an adequately trained workforce in the future.”