The impacts of the 2021 Budget on the construction industry
Richard Mussell, Managing Director at Rund Partnership comments on the recent Budget announcement by Chancellor Rishi Sunak.
“The government has announced new measures to help revive the country’s economy this year. Investments in housing and skills development have been key take outs, but it is questionable how far these measures will go to truly benefit the construction industry.
“The stamp duty holiday on properties up to £500,000 will be extended until the end of June, moving to £250,000 thereafter until the end of September and returning to £125,000 from 1st October. This will benefit many homebuyers in the short-term, allowing them to save up to £15,000 in tax if they can complete their sales by 30th June.
“The chancellor also confirmed a mortgage guarantee scheme to help first-time buyers access 95% mortgages. Such mortgages have been a lifeline in the past for first-time buyers, so this will be a welcome measure for those who may have had to delay their house purchase due to high deposit requirements.
“However, continually rising house prices will undoubtedly have an impact on the success of both the mortgage guarantee scheme and extended stamp duty holiday. The Office for National Statistics reported house prices climbed by 8.5% in 2020, the highest annual growth since October 2014 – and attributed this partially to the stamp duty holiday last year. Affordable housing schemes will therefore be more important than ever before to allow more people access to high-quality homes.
“The government also announced that the cash bonus scheme for hiring apprentices is set to extend by six months and double to £3,000 per hire, regardless of the apprentice’s age. There will also be a £126m investment in traineeships. These measures will allow more businesses to invest in well-structured, high-quality apprenticeship and training schemes, helping plug the current skills gap in the construction industry.
“Overall, it is encouraging to see measures related to improving homeownership and worker skills in place to help our industry get back on its feet. However, we still have a long road ahead of us to boost levels of homeownership and development to hit the government’s annual 300,000 housebuilding target by 2025. Affordable housing schemes will be key in achieving this target, alongside a genuine commitment from more companies to invest in training and development programmes.”