What does the UK Government’s Summer Statement do for Scotland?
In this new blog Ashley Campbell, Policy and Practice Manager at CIH Scotland looks at what the Chancellor’s announcement means for the housing sector in Scotland.
The Chancellor of the Exchequer, Rishi Sunak announced a range of measures to support the economy in a ‘mini budget’ on 8 July – but what does this mean for the housing sector in Scotland?
Reacting to the Chancellor’s statement, Finance Minister Kate Forbes welcomed some of the measures that will apply across the UK such as VAT reductions for tourism and hospitality. However, she also suggested that the economic measures only generate an extra £21 million for Scotland’s budget and therefore allow very limited flexibility for the Scottish Government to develop its own responses, tailored to local needs in Scotland.
Measures aimed at supporting jobs as the UK Government’s ‘furlough’ scheme is withdrawn will benefit organisations and employees in Scotland but the Finance Minister has argued that they do not go far enough and will be supplemented by £100 million investment in targeted employment support and training from Scottish Government. We would like to see housebuilding and retrofit prioritised in Scotland within the drive to create jobs and skill up the workforce.
The £2 billion Green Homes Fund which will allow owners to apply for up to £10,000 to carry out improvements to their homes will only be available in England. However, a separate Social Housing Decarbonisation Fund of £50 million has been established. Social landlords across the UK will be able to apply for funding to support demonstration projects seeking to showcase innovative whole house retrofit projects that can be scaled up and replicated across the country. This could present an opportunity for social landlords with plans in place but applicants will need to be quick off the mark to take advantage of such a limited funding pot.
The threshold for Stamp Duty was increased meaning that home buyers in England and Northern Ireland will not have to pay any fees on purchases up to £500,000 until the end of March next year. While this does not apply in Scotland, pressure following the announcement led to the Scottish Government announcing similar support for homebuyers here. Purchases up to £250,000 will be exempt from the Land and Buildings Transaction Tax (LBTT) until 31 March 2021 meaning that 80 percent of buyers will pay no LBTT at all. A £50 million top up to the First Home Fund was also announced by the Scottish Government and is expected to support up to 2,000 first time buyers.
While supporters argue that waiving LBTT fees will get the housing market moving and stimulate other areas of the economy as new owners invest in home improvements, decoration and furnishing, others argue that funding would be better spent on building new affordable and social housing. There is also some concern that cutting LBTT without increasing the overall supply of housing may drive up prices in areas where demand is already high.
Research published by CIH Scotland, Shelter Scotland and the Scottish Federation of Housing Associations in June sets out the need for 53,000 affordable homes to be delivered over the course of the next parliament supported by £3.4 billion. This is the type of long-term investment we need to see to meet housing need but also to support skilled jobs and the economy as we recover from the Coronavirus pandemic.