Could Family-Friendly Budget Signal Recovery

While hopes of income tax cuts to kick start consumer spending may have been dashed by Gordon Brown’s recent Budget, there were some hopeful signs that recovery could soon start to take place in the conservatory sector.

Explains Sally Fielding, Managing Director of K2: “One of the main factors affecting consumer spending in our sector over the past 18 months or so has been uncertainty about the housing market. People simply do not invest in their homes if they do not have confidence that they will realise the value of their investment when they come to sell. With all the doom and gloom about a housing market crash, times have been hard in the sector, but in the Budget, the Government made it clear that they want to initiate the market at entry level which will keep the housing market moving.”

According to the latest Right Move House Price Index, asking prices rose by 0.9% during March, reflecting a continuing trend of modest increases. The Government not only raised the threshold for stamp duty payments to £125,000 as part of the Budget, but changed the threshold for inheritance tax to £325,000 to stimulate movement at both ends of the marketplace.

Sally Fielding continues: “Both of these changes in tax thresholds may seem modest, but they will have a positive effect on the housing market. The stamp duty change is particularly significant as the whole market relies on a steady supply of first time buyers and in areas where a starter home can still be purchased for £125,000 this will give a real boost to the market.”

Sally also points to the Government’s pledge to increase family tax credits as another positive indicator for the conservatory sector. She continues: “Conservatories are still the best additional space solution for growing families and with reports that families are going to be better off is great news for the sector. Even for reasonably affluent families, tax credit payments can amount to the difference between a decision to invest in home improvements or just make do, so we could see an increase in sales to this section of the marketplace.”

K2 has focused its product development on up-selling opportunities to address the prospect of a gradual recovery in the sector. The launch of its Modular Conservatory Range featuring the groundbreaking K2 Konnect frame system provides a high quality, entry-level product and, in some cases, retailers may be able to up-sell to a higher specification system. Similarly wide ranging add-ons such as the Options range of Eaves Beam trims or the new K2 Aluminium Roof Vent give the trade the potential to maximise profits, even from a lower budget installation. With excellent opportunities to differentiate, in terms of both design and specification, K2 installers are ideally placed to benefit from any upturn in market conditions.

Sally Fielding adds: “The natural slowdown in the market over the past two years has been compounded by lower consumer confidence across the board. The recent budget will not turn things round overnight, but it does show some very positive indicators. For those companies that are able to approach the market at all levels, a boost to family incomes and renewed vigour in the housing market are an excellent base from which to build sales.”