In the Spring Budget, Chancellor Rishi Sunak spoke at the House of Commons, detailing his updates for the economy. With inflation at a 30-year high, and house price averages too, did he bow to pressure to act in the public’s interest? Here we outline the aspects of the Budget relevant to the property market, personal and business finances.
Moving Home
• With house prices standing at a 9.6% increase on 2021, the ‘average’ property will set you back £273,762 as of January 2022.
• The Bank of England bumped interest rates from 0.5% to 0.75% earlier in March. This follows two further jumps from 0.1% in December 2021, and 0.25% in January this year, all in order to return the cost of borrowing to pre-pandemic levels.
Cost of Living
• Inflation is at a 30-year high right now. At 6.2% in February, it’s likely to average 7.4% for the rest of 2022.
• Marginally bettering present petrol prices, fuel duty will be cut by 5p per litre until March next year. Although it may feel like small change, this represents the biggest cut to fuel duty rates ever.
• In the face of the huge 50% hike on the energy price cap, homeowners installing energy-efficient materials (solar panels, heat pumps, etc.) will not pay VAT. You can read our blog about energy in the home here.
• Side note: what will you be spending your £150 Council Tax rebate on?
Employment
• Unemployment, currently at 3.9%, is predicted to decrease.
• In what is the largest ever increase to a basic rate threshold, National Insurance will be payable from £12,570 in July, up by £3,000—worth over £330 a year individually, and £6bn in total for the 30 million people affected. However, this coincides with the 1.25% increase on contributions. Maths anyone?
• Income tax rate is to be cut to 19% (from 20%) by 2024.
Business
• The Employment allowance, giving relief to smaller business’ NI payments, will increase by £1,000 to £5,000 in April.
Adam Barker, Company Director, shares his stance:
”With so many rising costs being highlighted in recent months, it’s great to see a positive budget. With unemployment decreasing, and tax cuts for the large majority of tenants and homeowners, it should help contribute towards these rising costs.
Other benefits alongside this of course are continued local house price increases, meaning many people have a lot more equity than ever before, and continued low costs of mortgages. With rates between 1.75% and 2.25% available, and even 10-year fixed mortgages from 2.25%, moving home or remortgaging can help you fix what’s often the biggest monthly outgoing for the next decade!”
To discuss how these measures may affect you as a seller, purchaser, tenant, or landlord, contact us on 01525 40 22 66 or email ampthill@orchards.co.uk
For all the details in the Spring Budget, visit the Government website here.
