What does the property industry think as Budget 2016 approaches?

Posted 16 March 2016 by Helen Christie

With Budget 2016 fast approaching, the property industry is putting together its thoughts and predictions for what could be announced...

Budget 2015 saw George Osborne announcing the approval of new housing zones, greater investment in London housebuilding and a Help to Buy ISA scheme to help first-time buyers get on to the ladder. Here are some thoughts from industry experts on what they think might be announced in Budget 2016.

Mike Banton, managing director at Artez Ltd

“With the Help to Buy initiative scheduled to end in December 2016, the property industry may take a different turn over the next few years. After years of encouraging Help to Buy, the government could decide to switch its focus by pushing first-time buyers towards its Private Rented Sector (PRS) schemes and encouraging people to rent.

“The sharp rise in property prices, driven by a shortage in housing and coupled with falling incomes, has made it even more difficult for today’s generation to get onto the property ladder. With this in mind, we may begin to see private renting as the new norm and way of life, easing the urge for young workers and families to purchase a home straight away.”

Paula Higgins, founder and chief executive of the HomeOwners Alliance (HOA)

“I’m looking forward to seeing the detail of how the stamp duty surcharge will work. This could be a great lever to help those wanting to buy a home to live in. Let’s hope the government listened to the concerns of both existing and aspiring home owners and makes changes that do not harm many of the very homeowners they are trying to help.  

“Parents helping their children to buy, and those going through family breakdown should not be penalised.

“Downsizers may also suffer as the government is likely to insist that the 3% is paid up-front. It can then be claimed back when the original home sells. Homeowners thinking of downsizing could be deterred from selling as they may need to find additional thousands of pounds to complete their move.”

Richard Donnell, insight director at Hometrack

“We have seen pressure on the sector to increase the speed and volume of new home building with an extension of Help to Buy and an announcement of the Starter Home Initiative where the finer details are still being worked upon.  Changes to taxation around buy-to-let rules are still to play out over the rest of 2016. In the public sector housing associations are reacting to the rent cut and welfare reform which is impacting the scale and type of investment being undertaken. These policy changes need time to bed down and we think it’s unlikely there will be any further announcements in relation to the housing market specifically and that is probably a good thing.”

“However, at some point the Chancellor will need to address the impact of Stamp duty on below average levels of housing turnover. Currently it is helping to create scarcity of supply, adding to the upward pressure on house prices and compounding the plight of first-time buyers trying to get on the housing ladder. “

Nick Sanderson, CEO, Audley Retirement Villages

“The Chancellor is being short sighted if he thinks simply building more homes will solve the housing crisis facing the country. This is just a quick fix, and doesn’t address the root of the problem, that of ‘house-blocking’ and the millions of homes currently occupied by over 65s which could be released to the market if this group had somewhere decent to downsize to. 

“Freeing up under-occupied family housing by providing more suitable, high-quality housing for older generations would do far more to ease the already severe strain and lack of movement in the market. Further to this, Osborne needs to recognise the very real advantages of a stamp duty rebate for older homeowners – a measure that would be cost neutral for the treasury in bringing much needed family homes to market.”

Andrew Ellinas, Director of Sandfords

“Unlikely to happen, but Mr Osborne needs to start reversing the stamp duty changes he has made. Over the last four years there has been an unfair amount of tax changes including stamp duty, land tax and capital gains. Landlords and homeowners have been completely restricted with these additional tax charges, all of which have been very damaging on the housing market as a whole. The most recent change, the 3% surcharge on buy-to-let and second home properties, due to begin on 1 April, will undoubtedly deplete the level of rental stock. Not only will people then not be able to afford to buy they won’t be able to rent either.

"These so called ‘clampdowns’ as part of a spending review package are having a negative impact on the housing market. The Government has done what they always do and has been far too heavy handed causing the industry to suffer. Far from the conservative party being the property industry’s friend, they have in fact been our enemy making it increasingly more difficult and expensive for people to be able to afford to buy.

"In addition to this, it looks like the Chancellor is going to make another step tomorrow that will again knock the property market when he announces an insurance premium tax; an increase in home insurance payments."

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