Spring statement 2022 comments

On Wednesday 23 March 2022, the Chancellor gave the Spring Statement to Parliament.

Here, our residential and commercial teams highlight key points, and the potential impact on the UK property market.

Giles Sutcliffe, head of affordable housing, said: “With inflation increasing at a rapid rate and build cost increasing exponentially new residential projects are becoming increasingly financially unviable. We are hearing from some housing associations that build costs for large projects has jumped from £250 per sq m to £3,000 per sq m in just three years. Therefore the government, the GLA and local authorities need to get real on this issue and reduce their affordable housing expectations and contribute more government grants for affordable housing to ease the burden.”

Raoul Veevers, head of planning, says: “There are key messages and challenges that need to be considered in terms of planning – we need to get the economy moving again and deliver more new builds, but it is the how, where and what that the government needs to address. With increased pressure on local housing authorities to deliver, the government needs to ease the planning systems and align them with the levelling up agenda. Greater incentives for the private sector may be introduced to encourage investment into brownfield land and regeneration of urban areas, however with the current environment in Europe, they may be reluctant to invest. Furthermore, incentives for supporting alternative ways of delivering residential to meet the housing demand until the planning bill is passed later this year would have been welcomed, and ways to include locals in planning to bolster support for developments.”

Niall Keighron, sustainability practitioner, said: “It was expected that the cost of living and energy bills would be a significant priority in the 2022 Spring Statement. The announcement of the 5% VAT to be scrapped on energy saving materials such as solar panels and heat pumps will welcome further tax savings and also savings on household energy bills, which will further encourage households to adopt energy saving materials.

It was hoped that a non-domestic heat incentive scheme would also be included as currently there is no financial support for businesses or councils adopting large-scale low-carbon heating schemes, since the closure of the non-domestic renewable heat incentive in 2021. Lastly, no incentives to rapidly grow an affordable EV market were acknowledged – through grants and more charging points – which would help with reducing emissions and meeting net-zero targets.”

Ryan Jones and Michael Hampton-Riddington, partners in our business rates team said: “We were not expecting further business rate relief to be announced for struggling businesses other than the extended retail relief and additional smaller/regional relief funds, including CARF payments, that were announced during the autumn statement. Obviously this is disappointing as the end of the discount period for many small businesses is also nigh – and with Covid continuing to affect staffing levels and costs, it would be good if this could be extended.

We will continue to call for a fairer and simpler system. The consultation that has been mooted on business rates reforms will of course be too late for any actual action in this statement, which is a shame, but if it is announced properly with the three month window for input starting imminently then it’s a step in the right direction”

John Gravett, head of property management and infrastructure, said: “Our recent Connecting the UK report – in association with YouGov – highlighted that significant changes were needed to help speed up the UK’s connectivity. As such, we would like to have seen a greater focus on connectivity to help level up the UK including greater powers to local authorities to deal with local planning issues, wayleaves and incentivise transactions to enable the development of much needed infrastructure in locations that are behind on their broadband connectivity. Following the proposed reforms to the ECC being published just before Christmas, we would like to see these made into policy and rolled out quickly to support all stakeholders including fibre providers, telecoms companies and landlords in achieving deals that are fair for all and do not hold up infrastructure development or the roll out itself. We also believe that the Government should be able to publish the connectivity strengths of each postcode so that, like EPCs, vendors and landlords of properties can have access to ensure we raise awareness and enable the public to make better and more informed decisions in relation to digital connectivity and to provide greater accountability on government, local authorities and infrastructure providers.”

James Hyman, head of residential agency, comments: “The UK housing market has seen 18 months of its best performance in the last decade with house prices across the whole of the UK rising. The challenge is that this growth is unsustainable and out of kilter with people’s earnings especially with escalating inflation and increased living costs. Which, despite the Chancellor’s measures today, will likely lead to an element of anxiety in the market, potentially increasing market supply and bringing down house prices later in the year and into 2023.

“The biggest concern for the government right now is rental prices. They chased private landlords out of the market through the removal of all tax allowances and incentives, and now there are not enough private rental properties in the market, which has pushed rental prices up so much that tenants can’t afford the new rates and we have record levels of evictions.”