Property Industry reacts to Emergency Budget

News on the Block

Sept. 28, 2022

files/Screen_Shot_2022-09-28_at_11.46.50_AM.png

Lynda Clark, CEO of First Time Buyer Group, Comments:

“It’s about time the Government takes housing as a subject of address. We’re less than a month away from the end of Help to Buy, but we have yet to see an alternative low deposit scheme with the same level of oomph, though shared ownership is an invaluable option for many.

“Affordability remains a concern for the next generation of homeowners, with the average house price now above the current Stamp Duty threshold for first time buyers. The Government’s plans to ease this payment is a proven formula which will help to get people moving again, and could save homebuyers thousands during the most devastating cost of living crisis seen in a decade.

“Liz Truss is all about trickle down economics, and sure enough if homeownership remains affordable for all, then more first time buyers will inevitably be able to jump onto the bottom rung of the ladder. The Stamp Duty cut could help to bring homeownership back into reach for many, while shared ownership, First Homes Scheme and Deposit Unlock offer additional help.”

Edward Heaton, Founder and Managing Partner of buying agents Heaton and Partners, comments:

Stamp Duty

I have mixed feelings about the stamp duty cut given our business stands to benefit from these measures which will help fuel demand in an already highly competitive market, especially outside London.

The extensions to the nil rate band will be welcomed by first time buyers and for those acquiring lower value properties especially, but I can’t help feel the result will just be to shore up demand as we head towards a recession. It may also fuel inflation and it will ultimately make entry to the housing market ever more unaffordable for first time buyers when combined with increasing interest rates.

As someone who can remember when stamp duty was a flat 1% across the board I have never welcomed the steady increase in rates over the last three decades. The UK has now one of the highest rates of stamp duty for high value property in the world, all of which discourages mobility in the housing market. The increases announced today are understandably populist and unsurprisingly do nothing to help wealthier buyers.

Sadly the mini budget also did nothing to address the war on second home owners and international buyers with punitive rates imposed on both. I do not believe this is healthy, especially given many areas rely on tourists to fuel their economy. I also think in a post-Brexit world the UK should be doing all it can to help make us an attractive destination to foreign money and that should include their ability to buy property without being unduly penalised.

Whilst I believe the recent house price increases outside London are probably sustainable, the stamp duty cuts announced today will definitely increase the chances of creating a bubble which may then burst at some stage.

Proposed planning changes

 

I hope that government proposals to make changes to the planning system will start unlocking more sites to urgently address the overall lack of housing stock, especially in the south of England. From past experience though such policies often have little or no effect. The devil will be in the detail and I look forward to examining this further.

Rubens Brotto, Managing Partner at Nest Seekers International, comments:

“Already this week, we have seen the pound to fall further due to the government’s tax cuts and, with the potential public debt hole and the potential dragging into an economic crisis, we expect the sterling to be additionally weakened. This is not necessarily all negative, instead this creates opportunities for investors and buyers of real estate in the UK. We have seen a rise of American buyers in London with the strength of the dollar against our currency and international buyers in general flocking back to the UK. Having the attention of both sets of buyers is a very positive sign for the luxury property market in and around London and today’s announcements will open an opportunity for more international buyers to take advantage of the weak GBP indicating that the UK is the place to invest. Not just the high-end property market will benefit from these international injection of funds, we expect the mid to lower market to see interest of buy to let investors starting or/and increasing their property portfolios.”

Geeta Nanda, Chief Executive of the Metropolitan Thames Valley housing association and Chair of the G15 group of social landlords, comments

On affordable homes

 “Everyone deserves a home and the chance to live well, and this absolutely must be top of the government’s agenda, particularly given the economic strains we are seeing people experiencing thanks to record inflation rates, rising prices and unprecedented energy price hikes.

“As Help to Buy ends and the market enters a period of change, the government absolutely must ensure that accessible schemes such as shared ownership receive the investment they so desperately need. First time buyers need to know what will be on offer from the government and strong signposting that alternatives such as shared ownership are available in the market.

“Low deposit options are key to solving our housing crisis, and offer a real solution to first time buyers – particularly those who are stuck in the rental cycle and can only save a small proportion each month.

“As we look to the future, we will seek to engage the new PM and her government to work towards finding real solutions to the housing crisis and increasing the supply of affordable homes, whether through additional funding or through unlocking schemes to make the delivery of these homes viable. If we don’t act on this now, we could risk a lost generation of homeowners right across the UK.”

On energy efficiency

“The cost of living crisis is at the forefront of everyone’s minds, and there is a greater need than ever before to ensure that first time buyers in both new homes and existing properties are provided with the support needed to ensure that they can adequately heat their homes without breaking their bank balance. We hope to see solutions for first time buyers looking to retrofit existing properties across the country to benefit as many young people as possible.

“Across all of our new build developments, we are building homes with a minimum ‘B’ EPC rating, helping to improve overall affordability once our shared owners are in their homes and potentially saving hundreds of pounds in energy bills across the year.”

John O’Malley, Managing Director of Pacitti Jones, based in Scotland, says:

“Stamp duty is a poorly thought-out tax, dis-incentivising people to move so any measures to cut it, even in the short term will help encourage people of all ages to move including older people living in bigger properties than they now no longer need. It also makes it a bit easier for the younger generation to finance a property so should help underpin the volume of property transactions which supports significant jobs throughout the house move experience.

“If Scotland was to implement this saving and raise the LBTT threshold from £145,001 to £250,000, it might encourage some of the landlords who’ve left the market, as a result of ill-conceived changes that have been implemented by the Scottish Government, to come back and allow more students to take up or continue their studies. We know of examples where students now no longer are able to accept a place at university because they can’t find anywhere to rent.  This is a terrible position to put our younger generation in.

“The changes to National Insurance contributions should help companies that are struggling and allow more jobs to be retained which can only be positive news for the housing market in Scotland. The plans announced to boost economic growth will also underpin the local housing markets. It’s imperative that we in Scotland focus on economic growth to improve the living standards of everyone.”

Santhosh Gowda, Chairman of Strawberry Star, says:

“The stamp duty cut offers a welcome stimulation to the housing industry, particularly in light of Help To Buy coming to an end, that will hopefully underpin economic growth and boost consumer confidence. It will encourage more people to move, including downsizers, which will free up family homes and allow first time buyers to get on the ladder. This will be a major fillip to the sector which faces cooling housing prices amid rising inflation and interest rates. 

“By boosting growth of the residential sector, this will have a knock-on effect on the wider real estate sector and the economy in general. 

“However, this is not a panacea. It does not change the fact that demand is still outstripping supply and it’s possible that house prices could prove increasingly volatile. Additionally, it does not address the more fundamental problem at the heart of the market which is the shortage of housing stock.”

Source: http://www.newsontheblock.com/news-opinion/property-industry-reacts-to-emergency-budget



Rubens Brotto Rubens Brotto
Managing Partner - Real Estate Advisor