The Chancellor of the Exchequer, Philip Hammond, presented his hotly anticipated Budget to a packed Parliament on Wednesday 22 November 2017.
After a series of crushing tax changes for the UK property market, I among many in the industry hoped for a smoother ride today.
And I think we got it.
A budget to help the property sector?
Hammond dedicated a decent part of his hour-long speech to Britain’s housing crisis. He stated that his government was determined to fix the problem that has put the dream of home ownership out of reach of so many.
It was good to see such a focus – backed up by a raft of measures focussing on house building:
- Overall he pledged to building 300,000 homes per year by the mid 2020s, the highest level of house building since the 1970s
- £44 billion of capital and loans was committed to accelerate the current rate of house building
- New cash was announced for the Home Builders fund to encourage SME house builders to get building again rather than relying on the big house building companies
- £ 34 million was pledged to support the development of construction skills in the UK (useful given that we may lose many of our skilled workers after Brexit)
- He highlighted the disparity between planning permissions and housing starts. He has commissioned a report, due in the Spring, to investigate why people might be holding onto land and give local authorities power to act
- The focus would be on building homes in urban areas and around transport hubs rather than on green space
- 5 new garden towns were pledged, to be built through a public private partnership
- Local authorities will now be allowed to charge 100% council tax on empty properties to discourage owners leaving property empty
While the focus on house building will have no immediate effect on the London property market in the short term, in the longer term more supply across the UK will mean the market as a whole will get moving again.
The big headline – no stamp duty for first time buyers on property up to £300k
The announcement that got the biggest reaction in the house was that with immediate effect, stamp duty for first-time buyer purchases up to £300,000 was abolished. And in London, this applies on the first £300k of property purchases up to £500k.
This is great news for those about to get on the housing ladder –saving them around £5,000 in tax.
The Chancellor estimated that 80% of first time buyers would benefit from this. But industry experts and the Office for Budget Responsibility are already predicting that this change may filter through to house prices fairly quickly with a predicted rise of 0.3%. So for first time buyers to benefit, they will need to act fast.
A note of caution – the problem is the deposit not stamp duty
For those dreaming of owning their own property, the problem has never been stamp duty. The biggest hurdle has been how to save for a deposit.
Help to Buy has helped a little but with rent and living costs taking up ever more of people’s diminishing in real terms pay packets, saving the thousands needed as down payment on their first mortgage is still nigh on impossible for many. And nothing in today’s budget addressed that.
This change also doesn’t address what I see as the main problem for the housing market; the mover or downsizer. These are the people that keep the market moving and at the moment they are put off by the prohibitive cost of buying and selling.
A neutral budget for the property market promises stability
Although the Chancellor didn’t give the property market any early Christmas presents today, he didn’t give us any nasties either.
So I for one am relieved that we can carry on as before – although perhaps a bit disappointed he didn’t choose to reverse any of the tax changes announced by his predecessor, George Osborne.
I think the help given to first time buyers will in time filter upwards and free up the middle part of the market. I also welcome a period of relative stability as far as property taxation goes. Goodness knows we need it after the various punitive changes we’ve suffered in recent years.
Whether the stated determination of the government to fix Britain’s housing problem will yield any results, who knows. We can only wait and see.
If you have a property that may be suitable for a first time buyer, now is the time to put it on the market.
If you’d like any advice on selling your property or the current state of the market, please don’t’ hesitate to get in contact.
Michael Wilson, Managing Director