Global commercial real estate company Colliers International, has responded to today’s Summer Economic Update from the Chancellor of the Exchequer, Rishi Sunak.
Experts from across the business have given their opinions on the temporary stamp duty changes, VAT cut, the Coronavirus Job Retention Scheme and the new Eat Out to Help Out scheme.
Dr Walter Boettcher, Head of Research and Economics, said: “Today’s announcements had a few novelties, but employed conventional tools from the Treasury’s toolbox, such as using the UK housing market to stimulate economic activity. Nevertheless, there were several new interventions, designed to get us through the economic downturn.”
Coronavirus Job Retention scheme
Considering the update on the Coronavirus Job Retention scheme, Dr Boettcher said: “The Chancellor has confirmed that the furlough scheme will be wound down in October as already scheduled. But the new payments, the Kick Starter scheme, as well as training programmes, offer some transitory arrangements for certain segments of the workforce, but will not prop up the workforce as the furlough scheme has done so far. The real question remains as to whether the timing of existing furloughing scheme will align with the incipient economic recovery. Given that a vaccine, according to press reports, may become available in October, that could be a definitive month in shaping the UK’s recovery.”
Speaking about the temporary stamp duty changes Andrew White, Head of Residential at Colliers added: “Stamp duty has long been a blocker to the UK’s housing market, as it’s a huge fee buyers have to find, on top of a significant 5-10 per cent deposit. Any reduction in stamp duty right now would be a welcome reprieve for the housing industry, which naturally all but stagnated during the COVID-19 lockdown. While pent up demand has been released now that buyers can carry out viewings, reducing the amount of funds they have to raise in advance would bring even more buyers to the market quicker.
“However, we would welcome further thought on the higher rates of stamp duty which is slowing the sale of properties over £925,000, which is significant part of the market in London and the South East.
“Likewise, the previous 3 per cent surcharge for second properties and the tightening of tax allowance for the private buy-to-let market means that the transmission mechanism may not deliver the intended results at a scale similar to what might have been achieved in the past.”
VAT reduction and Eat Out to Help Out
James Shorthouse, Head of Alternative Markets, which includes hospitality and leisure, shared his thoughts on the measures targeted at these sectors. He said: “The cut in VAT to 5 per cent until January is very welcome news for the leisure and hospitality sector and will be a clear boost for consumers, if the cut is passed on, increasing their spending power and encouraging them back into pubs, restaurants, hotels and tourist attractions. This, alongside the new Kick Start Scheme will provide much needed support and security for the millions of young people working in the hospitality sector.
“The introduction of the ‘Eat Out to Help Out’ scheme is a surprise development, and should certainly encourage people back into our restaurants and re-establish eating out as a normal part of daily life.”