23 April 2009

A Budget for better KBB business?


The dust has started to settle on the latest Budget announcement but even with the benefit of looking at the details after a good night's sleep (although I did have a nightmare about being paid £150K a year and having to pay 50% tax on it), there seems little in it that will have those in KBB-Land leaping in the air and clicking their heels together in joy.

This is not the time to discuss the wisdom or otherwise of the KBB sector being so firmly linked to the housing market, but the fact remains that if the property sector is depressed, the KBB sector is as well.

"Support for homeowners and homebuyers, including with a £600 million funding package of measures to build more homes through unlocking sites currently sitting as dormant, and an extension of the stamp duty holiday for all houses costing up to £175,000 until the end of the year."


Will the measures announced on Wednesday kick start the housing market? It certainly seems unlikely, although any help is to be welcomed.

While those who live in the over-priced property market that is the south of England may laugh at a stamp duty holiday on property costing up to £175K, in many other areas of Britain you can get on the housing ladder for less than that.

The lack of stamp duty will not prevent people buying a home, and the reduction it brings may make the possibility of owning a home more realistic for a good number of first-time buyers.

Given the state of the economy, this was never going to be a Budget to have people dancing in the aisles, but I cannot help feel it could have been a little more KBB-positive.

A trick was surely missed by not reducing VAT on substantial home improvements and refurbishments. Leaving aside the boost to employment in the construction industry that a growth in property refurbishment projects would bring, thousands more homeowners could have experienced the feel-good factor of a new kitchen or bathroom in their lives.

Truth be told anything short of free chocolate for life was unlikely to get many people cheering about this Budget but is there any such thing as a 'Budget for better KBB business'?

One thing needed for sure is a change of attitude to property. I think we should get away from thinking of homes as short-term investments and return instead to buying a home to live in.

Investing in the home, not treating the home itself as an investment, means the owner will buy better quality kitchens and bathrooms rather than something from the "Cheap As Chips" shop to maximise the 'return' on their 'investment'.

Professional 'Budget Pundits' claim that the Chancellor held back from announcing measures that he deemed as politically unacceptable (or unelectable), such as a hike in the basic rate of income tax.

But one truth we have to face up to is that some people may not be able to afford to buy a home.

For these people, good quality affordable property to rent is a must - and once again the construction industry would benefit.

Lest we forget, it was largely giving loans to people who were never going to be in a position to repay them (based on the assumption that property prices could only ever go upwards), that got the banks into the mess we now all have to clear up.

Any Budget that stops that happening again really will be a 'Budget for better KBB business'.

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