TPP417: March Market Update (Budget special)

The 2021 budget was considered safe and focusing on recovery by our podcast hosts, Rob and [Name]. While there were some positive aspects, such as infrastructure improvements and extensions to certain support schemes, both Rob and [Name] expressed a desire for more ambitious investment announcements to boost the economy and build for the future. The budget seemed politically safe, with measures to keep various protections and schemes going, and any tax rises were either in the future or not affecting individuals directly. Overall, it was a budget aimed at getting the economy back on track after the challenges of Brexit and the pandemic, but with a lack of major announcements that could have significantly shifted the property market landscape.

Key takeaway from the budget discussion is that the government raised corporation tax from 19% to 25%, targeting large corporations instead of individuals. This move was seen as a smart decision as people are less likely to protest against corporations than their own taxes. However, individuals will experience a tax rise in the future due to frozen tax thresholds, which will result in more people paying taxes and moving into higher tax brackets as wages and inflation increase. Despite some support measures and the lack of significant bad news, this budget was notable for the corporation tax increase. The government's decision to increase corporation tax could be a response to the debate on whether lower corporation tax generates substantial investment, and the potential need for extremely low or close-to-zero corporation tax to attract companies.

The UK government has announced several economic measures to support businesses and individuals during the ongoing pandemic. These measures include extending the furlough scheme and Universal Credit, as well as creating new Freeports with tax breaks for specific areas. However, there is skepticism about the government's commitment to the 5-year plan for some policies, and the effectiveness of the Freeports initiative, which has been tried before with limited success. The details of the incentives for the Freeports have not been fully established yet. Overall, these measures aim to provide relief and support during the economic uncertainty caused by the pandemic.

The UK government's budget announcement includes an extended stamp duty holiday, which will last for another 6 months. This extension will allow people to purchase properties worth up to £250,000 without paying stamp duty, providing a significant boost to the property market, particularly in areas like the Midlands and the north of England. This extension is longer than anticipated and could lead to a surge in property prices, potentially reaching boom level figures of over 5%. This news comes as the economy is showing signs of stabilization after last year's strong growth, and as people who have been saving during the pandemic start to enter the market. Overall, the stamp duty holiday extension is a welcome development for property investors and the property market as a whole.

The UK government is implementing new policies to support the housing market, including a mortgage guarantee scheme that allows buyers to purchase with a 5% deposit, and an extension of the Help to Buy scheme for all residential buyers. These measures aim to increase affordability and stimulate lending, potentially leading to higher property prices. As an investor, it may be challenging to find good deals in this market, but focusing on getting in at a decent price could still result in capital growth. Additionally, these policies contribute to inflation and money creation through new lending, not just from central bank action. Overall, the market is expected to get stronger, making it a crucial time for investors to adjust their expectations and strategies accordingly.

The 2023 corporation tax rate increase from 19% to 25% may not be as detrimental to property investors as it initially seems. The lower rate of 19% will still apply to profits below £50,000, and there is tapering for profits between £50,000 and £250,000. This means that the vast majority of property investors will continue to benefit from the competitive 19% rate. Additionally, there were no changes announced regarding capital gains tax, which was a concern for many investors. Overall, while the budget may not have been overly ambitious, it was a safe and solid one for the general public, and the lack of changes to capital gains tax is a positive sign for property investors.

The 2023 budget is considered a win for property investors due to the lack of new policies targeting the sector. The property market is expected to continue growing, which could make it more challenging to secure deals but ultimately benefit investors. Notably, house price growth has reached 6.9% annually, a significant increase since the start of the podcast, and this trend is expected to continue. These figures, reported before the budget, indicate that property prices may experience even more growth in the coming months with the added stimulus from the budget. This bullish market aligns with the concept of the 18-year property cycle, which has been wobbly but is now showing signs of strength. The speakers express surprise and optimism about the current state of the property market, predicting that annual growth will likely remain above 6% for the rest of the year.

History tends to repeat itself in the realm of housing markets and government policies. After initial cautiousness and prudential measures are put in place to prevent financial instability, governments eventually ease up and encourage high levels of borrowing and lending, leading to potential risks. This cycle is currently repeating itself, and it's essential for investors to stay informed. Another essential takeaway is the importance of continuous learning and application in property investment. Sam, a successful listener, shared his story of refurbishing a flat and acquiring his first buy-to-let property through dedication and hard work. Lastly, exploring vacation destinations on YouTube can help build excitement for upcoming trips and provide valuable insights into the areas you plan to visit. This tip, along with sharing success stories and engaging in discussions on Property Hub UK's social media channels and forum, are great ways to stay motivated and informed in the property investment world.

YouTube has become an invaluable resource for learning new things and gaining insights, especially when it comes to travel and specific interests. The platform offers a wealth of information through videos created by experts and enthusiasts. For instance, instead of relying on traditional sources like books or apps for travel tips, one can turn to YouTube for firsthand experiences and recommendations from other travelers. This not only broadens one's knowledge but also saves time and effort. Moreover, this approach can be applied to various interests, making YouTube a go-to platform for acquiring new skills or understanding complex concepts. The Property Hub UK and Any Other Business channels on YouTube are great examples of this, offering valuable content for property enthusiasts and business owners, respectively. Overall, YouTube's vast library of user-generated content makes it an essential tool for learning and discovery.