This week’s budget announcement will hopefully provide some good news for housing associations, even as we face the biggest economic challenge for generations. As the UK prepares for COVID-19 restrictions to be gradually eased during the course of 2021, there is still a lot of uncertainty but also hope for the future within the housing sector. The Chancellor needs to evaluate the time frame of current measures that were put in place to support housing providers and tenants during the pandemic, as well as implement solutions to economic challenges caused or accelerated by Covid-19. In this article we have set out what we think could be expected on Wednesday’s announcement.

The key points expected to be confirmed on Wednesday are:

Furlough and Universal Credit

The government is widely expected to extend the furlough scheme, which is good news for a sector that is already facing increased rent and service charge arrears. Housing providers will be watching the new expiry timeline (expected June 2021) with keen interest, and hoping that it continues to support residents as the economy begins to rebuild. 

It is less clear whether the extra £20 per week to Universal Credit will be extended beyond April 12th. This is currently a lifeline for many residents and could have wide-reaching ramifications if no extension is granted.

The extension of the SDLT holiday

The SDLT holiday on values of up to £500,000 which was due to end on the 31 March is expected to be extended for a further three months. This moves the SDLT-free band up from £125,000 to £500,000, and houses above that value will also enjoy a reduced total SDLT value accordingly. It is not yet known whether this extension will be available for all purchases or whether it will only apply in instances where purchases had already been agreed prior to the deadline.

It is important to note that this extension only applies to private residential purchases, so will not benefit housing associations directly in their acquisitions – and first time buyers already benefit from discounts. However, the extension will likely continue to stimulate activity in the residential market by increasing the number of other initial and onward sales. The last use of this policy is indicated to have led to 130% increase in transactions in the final quarter of 2020 according to the Centre for Policy Studies.

Mortgage guarantee scheme

The government is reportedly going to bring back 95% mortgages for potential buyers who are only able to obtain 5% of the deposit. This is expected to be offered via government-backed guarantees to buyers of houses of values of up to £600,000 and is likely to be brought in from April.

This policy is mostly aimed at young first-time buyers who are currently renting and struggling to raise the usual deposit that would be required to satisfy lenders of the risk.

What else will be discussed?

Other key points being discussed which could indirectly effect the sector are:

• Confirmation of the rise in minimum wage rates;
• Support for businesses impacted by Covid, in attempt to tackle unemployment; and
• Freezes in income tax thresholds

Next steps

While we cannot be certain on the above points, in past years government pre-budget leaks have been relatively accurate. To receive the latest information, watch out for our live budget updates on Twitter (@CapsticksSH) on Wednesday, and our upcoming insights where we will explore how this year’s budget will shape the next 12 months for the housing sector.

If you have any queries around what's discussed in this article, and the impact on your organisation, please speak to Susie Rogers to find out more about how Capsticks can help.