Budget 2016 - more reactions from the property industry

Posted 18 March 2016 by Helen Christie

WhatHouse? gathers more reaction from senior figures in the property industry to Chancellor George Osborne's Budget 2016...

Chancellor George Osborne has presented his eighth Budget and among the many new announcements are a number of factors affecting the UK’s homeowners, house-hunters, housing market and property industry. WhatHouse? has gathered more reactions from the leading experts in the property industry...

Nick Leeming, chairman at Jackson-Stops & Staff: “The UK is in desperate need of a housing policy which caters for the long-term, reflecting the future needs of a growing population and changing demand for property type and tenure, which looks beyond the next parliamentary period. We are also in desperate need of more homes. We need more incentives, and easier processes, for small and medium-sized housebuilders to get building.

“Lifetime ISAs, outlined today, are another supportive measure for first-time buyers and are a significant boon for those looking to save for a home. However, this is another measure which boosts demand and today we heard very little about supply – increasing housing supply is key to easing property price growth.

“The confirmation that there will be a 3% stamp duty surcharge for second home owners is a real blow – and the brunt of this change will be felt by tenants and not landlords. There was no detail given today in the Chancellor’s speech and there are many questions unanswered.”

Richard Sexton, director of e.surv chartered surveyors: “First-time buyers may be feeling disappointed by today’s lacklustre budget announcement, which failed to address the lack of housing supply, again skirting over any substantial changes to planning reforms. The same problems will remain.

“Although the Help to Buy ISA has proven popular, many are finding it increasingly difficult to save. The new Lifetime ISA has the potential to increase savings ability – but the average deposit in January stood at £28,393. By this measure it would take an individual first-timer 6 years in order to save this amount. On the Help to Save Scheme it would take 32 years.”

James Davis, partner and head of building consultancy at Daniel Watney: "While land supply and planning restrictions have played their part in holding back housing delivery, the shortage of skilled labour and key materials is another major obstacle and one the government has yet to fully address.”

Dr. Neil Blake, head of EMEA Research at CBRE: “Lower growth forecasts, due to lower productivity may look like gloomy news for retailers if it translates into lower wage growth and weaker consumer spending, but continued optimism around employment growth is good news for future demand for office space.

“Commercial property stamp duty changes coming in at midnight will come as some relief to smaller property owners, but is effectively tax grab for the Chancellor, to the tune of £500m; a significant 15% increase in the tax take.”

“New rules to tighten up tax rules for offshore property investors and developers will have some impact on returns from overseas interests, but if the Chancellor is right about the UK being the fastest growing major economy over the next five years, the UK will continue to be an attractive investment prospect.”

Naomi Heaton, CEO of London Central Portfolio: “Overall, the Budget was not bad news for individual property investors. There were none of the shocks that we have been accustomed to in previous Budget speeches. Investors have already absorbed the inevitability of ARSD and it will only be a matter of time before it is assimilated it into the buying equation, particularly in London. The pain will be felt far more in the regions where the 3% rise represents a significantly greater increase on the existing stamp duty land tax rates.

"The best news appears to be for shareholders in property funds and investment companies who should benefit from the new reduced Capital Gains Tax rates. This aligns with the Government’s intention to encourage investors to go into the UK’s PRS through a professional entity, rather than in a private capacity.”

Paul Smith, CEO of haart estate agents: “The country’s housing shortage can only be solved by boosting the supply of new homes, and the government could have gone further in making this a priority. While the Lifetime ISA is a positive step forward that will make it easier for people to save for a deposit on a home, more should have been done to bring housebuilding into greater focus.  In his budget, George Osborne claims to put the next generation first, but this missed opportunity means that the supply of homes will continue to be low, leading to greater pressure on prices, which will largely affect first time buyers in the majority.”

“In the buy-to-let sector we have seen a surge in purchases ahead of the extra 3% stamp duty for landlords being introduced in April, but we’re now likely to see a significant fall in buy-to-let purchases as soon as the new measure is introduced. That might result in a levelling out of prices but it will also mean less investment into new build buy-to-let properties, which is essential for anyone who cannot afford to buy, especially in London. Tenants are likely to be the biggest losers as landlords pass on the increased costs through rent rises.

“The property market appears to have been spooked by uncertainty around Brexit in the last month, with fewer people selling, and this was the government’s chance to support the residential market.”

Andrew Bridges, managing director of Stirling Ackroyd: “The Chancellor is changing London’s status as a world-leading capital. What Londoners needed today was a bold move to free the capital from housing uncertainty – but what we got was mainly a bigger bet on the same status quo.

“The biggest problem will be transforming attitudes. Across 2015, London borough councils rejected 23% of potential new homes. Even if everything goes exactly as hoped-for in the latest Mayoral plan, London will face a minimum yearly shortfall of 6,450, a massive 13% of the new homes needed unless boroughs exceed targets.

“The Chancellor may have a long term plan for the economy – but a viable long term plan for housing in London remains to be seen.”

Andrew Ellinas, director at Sandfords: “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.

“In addition to this, the Chancellor took another step today that will again knock the property market when he announced an insurance premium tax; an increase in home insurance payments of 1%. It's only a small rise but it's just another one to add to a long list.”

Stuart Law, CEO at Assetz for Investors: “In my view, the uncertainty has been removed from Buy-to-Let taxes in today’s budget. The Budget has clarified that the 3% additional stamp duty will apply to second residential properties that are bought by individuals and companies alike. It has become a cost of investing in the best asset class for several decades and at the forecast growth rate of 5% in house prices this year will take just 7 months to get back!

“In addition it still looks like companies that are used to purchase buy-to-let property will be able to fully offset their mortgage interest against income and achieve full tax relief. The many and varied company tax reliefs such as a 17% tax on profits and capital growth could also mean that setting up a company actually made matters better for a BTL investor than before the tax changes when investing privately.”

Phil Harris, head of sales at BLP Insurance: “Measures announced in today’s budget will go some way towards stimulating housebuilding in the UK but it’s disappointing the lack of new initiatives directly applicable to providing a long term solution to the chronic housing shortage.

“Stones remain unturned and significant challenges still exist for the UK housing industry, including the current skills gap and a shortage of traditional building materials. In the absence of long-term solutions to all of these headwinds to the housing shortage, they will continue to have an adverse impact on the speed at which new homes can be built.”

Rishi Passi, CEO of Oblix Capital: “Such large scale investment is welcome news, which should go some way to relieve the tension currently felt in the UK property market. Specifically, Osborne’s announcements around the HS3 rail link and motorway construction bring the reality of the Northern Powerhouse tantalisingly close. 

“If this becomes a reality it would pave the way to unlock the value of the regions: supporting house prices and construction activity beyond the South East. But, just to sound a note of caution: these projects won’t happen overnight – and with the economic storm clouds gathering and a potential Brexit on the horizon, only time will tell how much of Osborne’s plans will become reality.”

Mark Tunstall, managing director of Tunstall Property commented: “Many property experts would - in an ideal world – have liked the Chancellor to repeal the recent stamp duty changes; although for political reasons this is highly unlikely to happen. The ultra-prime lettings sector, which has already had a fairly buoyant couple of years, is therefore likely to continue to benefit.

“Moreover, the Chancellor’s decision not to cut the amount of Capital Gains Tax paid by investors on buy-to-let properties in today’s Budget is likely to further deter landlords from investing in new stock, which can only put upward pressure on rents.

“Looking ahead, however, from an international perspective we believe that London will continue to attract both overseas investors and end-user buyers because even when the additional 3% of stamp duty is added to the UK property tax bill from April 1st, transaction costs in London still compare relatively favorably to those in Hong Kong or Monaco, where the property market is more stringently taxed.”

Michael Hunter, partner at Addleshaw Goddard: "The Chancellor's u-turn on exempting institutional and other large investors from the 3% supplementary stamp duty land tax hit was a surprise, probably motivated by fear of EU state aid rules or yet another judicial review challenge from the buy-to-let investors"

Jake Russell, director at Russell Simpson commented: “After a number of unexpected reforms to stamp duty land tax and changes to the taxation of non-domiciles in recent months and years, it is a relief to see the absence of any further major upheavals relating to the property market. It is therefore welcome news that we can continue, in our market, to adjust and acclimatise to the seismic forthcoming changes. We look to an uncertain period ahead, which – with the correct advice and guidance from agents – has the potential to be fruitful for buyers and sellers alike.”

Martin Bikhit, managing director of Kay & Co: “It was pleasing to see that the Office for Budget Responsibility has predicted a steady growth rate in the British economy of around 2% until 2020. This, when combined with the announcement of the Crossrail 2 north-to-south train line through London will positively affect the London property market, as we have seen areas such as Paddington benefit from investment and rising property values due to the original Crossrail.

“We welcome the announcement that Capital Gains Tax is to be cut, as it allows greater investment into London; we hope to see more people investing in the London property market as a result of this policy. Unfortunately, the higher rates of stamp duty land tax that were announced in 2015 and the 3% surcharge on buy-to-let properties and second homes will continue to stifle the property market in London.”

 

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