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Budget 2017 preview: Property industry wants stamp duty changed 

Posted 7 March 2017 by Ben Salisbury

The housing sector wants Stamp Duty changed in Philip Hammond's 2017 budget, by making it a seller's tax, cutting rates or both, to help boost the market

The Chancellor of the Exchequer, Philip Hammond, delivers his first and final March budget on Wednesday, before the budget reverts to an annual event, the Autumn Statement, delivered by the Chancellor in November each year.

After an eagerly awaited but underwhelming White Paper on housing in February, the property sector retains a wish-list for changes that could help tackle the main issues from a lack of affordable homes and planning restrictions to how current Stamp Duty rules discourage buyers and changes that have impacted the buy-to-let market.

The budget itself is expected to be a low-key affair with preparation for Brexit and changes to the provision of saving for long-term health care likely to be the focus.

But, what crumbs of comfort might fall from the Chancellor’s red box on Wednesday, if any, and what would the industry like to see announced on a range of issues?

Founder and CEO of eMoov.co.uk, Russell Quirk, said: “As always there are many predictions around what Wednesday may bring for the UK economy going forward, but disappointingly the current property crisis doesn’t seem to feature very heavily.

“We wait in hope that Mr Hammond is keeping his cards close to his chest and that he has something up his sleeve for UK buyers, in particular.”

Unsurprisingly, across the spectrum, a repeal of the changes to Stamp Duty introduced in 2014 is top of the industry’s wish list as it was for our readers in our recent survey

Stamp Duty

Russell Quirk, Emoov said: “What he needs to do is turn Stamp Duty on its head or eradicate it altogether. Pivoting Stamp Duty so that it is paid by the seller would assist those beleaguered first-time buyers, particularly those in the south east who currently pay nearly £6,000 just for ‘permission’ to jump onto the housing ladder in one of the UK’s most expensive areas.”

Rachel Johnston of Stacks Property Search said, “One of the biggest problems for the property market is Stamp Duty, which has clobbered the market over £1m, particularly in the country. Philip Hammond would do well to swallow the potential political backlash in being seen to help the well-off, by lowering the Stamp Duty at the upper end of the market and releasing a damaging blockage to the market at all levels.”

Simon Gerrard, past president of the NAEA and MD of Martyn Gerrard, said: “In my view a Stamp Duty reversal, in which Stamp Duty would be payable on the home you are selling (where you invariably have benefitted from capital growth) and not the home you are hoping to purchase, could be transformational. It would mean first time buyers and those hoping to move up the ladder are encouraged and not penalised for aspiring to a bigger home. If the Chancellor really wants to support individuals and families across the UK then he must consider this option.”

Banda Property CEO Edo Mapelli Mozzi said:  “In the Government’s own words “the housing market is broken”, but so far they seem to have little appetite to try and fix it. 

“There are three key changes Hammond could make that would have an immediate effect. Firstly, exempt first time buyers from STLD altogether. Secondly, abolish the 3% surcharge that is suffocating the build to let market and reducing transactions. Finally, lower the top rates of SDLT as the hike from 5% to 10% at £925,000 is counterproductive.”

Stamp dutyRory O’Neill, head of residential at Carter Jonas, comments: “A reduction in Stamp Duty costs is the final catalyst that the market needs to boost transactions and we wholeheartedly call for this in the Budget. While George Osborne attacked the residential market two and a half years’ ago, we are optimistic that, with his experience as a developer, Philip Hammond will work to create a more favourable environment in which housing can flourish.”

Jason Rishover, CEO, Heronslea Group said: “Since the hikes were imposed back in December 2014 nationwide sales have dropped significantly. The Stamp Duty hike has not just impacted the prime areas which it was intended for, but the entire market. These low sales are having a harsh effect on tax revenues as fewer sales means less Stamp Duty is paid.”

Jake Russell, Director at leading London estate agent, Russell Simpson, said: “This seems to be a repetitive point, but without question it has impacted the market. It seems to be an issue that the entire market agrees on, therefore an alteration would be hugely beneficial to the Treasury’s bottom line.”

Rental market

Christine Newell, mortgages technical director at Paradigm Mortgage Services said: “For landlords, we would like to see tax breaks for those who consistently keep rents stable or lower than market averages for their geographical location particularly in London & South East – the follow-on from this is that it might then encourage and help tenants to potentially save for deposits to purchase using schemes like the new LISA, which will be introduced from April.”

Lloyd Davies, operations director at The Conveyancing Association said: “The recent Housing White Paper from the Government talked about ensuring the private rental sector (PRS) was on an even keel with other tenure options. However, at the same time, we have measures which actively discourage individual investment in the PRS, on Stamp Duty and mortgage interest tax relief.

“We continue to call for the government to make a u-turn in both these areas. The PRS should not just be the preserve of institutions and we believe change is absolutely necessary to provide a level-playing field for individual landlords.”  

Stuart Law, Chairman of Assetz Property, said: “The spring budget is a chance to kill the buy-to-let mortgage interest charge, or tenant tax as I call it, stone dead. In one fell swoop the chancellor could restore the health of the UK’s rental sector.

“However, he is a cautious man and I suspect it is unlikely we will see anything genuinely impactful in the budget, lest he be accused of a ‘giveaway’.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “In my opinion, the chancellor should do even more to encourage sales and lettings market activity, which will help to keep prices/rents in check and stimulate economic recovery, as well as better delivery of affordable housing.”

Land

Simon Gerrard, past president of the NAEA said: “There is a severe lack of homes being built, simply because there is not enough available land. The government could fix this in one swift move – by imposing a capital gains tax moratorium on land sales for three years. This would provide those sitting on land with an incentive to sell, freeing up land for development that is so desperately needed.

Support for housing schemes

Shared ownership​Daniel Hegarty, CEO and Founder of habito, digital mortgage broker, said: “With the millions of pounds being poured into new developments across the country, it’s imperative to ensure those homes are accessible to the broadest cross-section of the population. We’ve seen a rise in both Help-to-Buy and Shared Ownership schemes, signaling a greater need for these schemes at a time when house prices are at their peak.

“We need to see Hammond put his money where his mouth is and either extend or introduce new help-to-buy or shared ownership schemes.”

Supply

Rob Bence, co-founder, The Property Hub said: “Like most property investors, I’m hoping buy to let will be noticeably absent from next week’s Budget.

“Elsewhere in the property market, I would like to see the issue of supply taken more seriously. Half-hearted measures like those announced in last month’s White Paper do not go anywhere near far enough. We need to see Mr Hammond announce some solid plans for forcing builders to meet targets without compromising quality.”

Paula Higgins, chief executive of the HomeOwners Alliance said: The Resolution Foundation has predicted that the chancellor will have a £29 million windfall in next week’s budget. We would like to see some of this windfall diverted toward a national house building programme delivered through local authorities.

“We would also like to see the government create a fund to help existing leaseholders buy back their freehold from land owners and managing agents that raise ground rents exorbitantly or charge excessive fees for maintenance, management and administration charges.

“Take up of Help to Buy ISAs has been strong because saving for a deposit is an enormous challenge. We would like to see the government raise the ISA bonus caps in line with property price inflation and allow people to save more than £200 each month. This will be a genuine leg up to help people get onto the ladder.”

Mortgages

Jean Liggett, Founder of Properties of the World said: I think the government should be making it easier for people on zero hours contracts to obtain mortgages.

I think this is particularly important as the phenomenon of a ‘job for life’ is dead and employees may only stay at a company for 1 or 2 years. Also, there has been a substantial rise in the number of people being self-employed in the UK. Mortgages need to reflect the changing workplace in the UK so that a growing sector of the population is not shut out from owning a home.”

Completion notices

John Elliott, Managing Director of Millwood Designer Homes said: “I am concerned about the previous announcement in the recent Housing White Paper to allow councils to issue completion notices demanding builders start building within two years rather than three.

“This is fraught with danger and will suppress housebuilding rather than ensure the Government’s housebuilding targets are achieved.

“Once planning has been granted on a site, it can take 18 to 24 months before the planning conditions are satisfied, and to ask housebuilders to spend huge sums to secure planning over sometimes several years, for councils to then decide the development is not valid on the new timetable, is unacceptable.

“As an established regional housebuilder, specialising in transforming challenging sites into striking residential developments, this will put us under tremendous pressure and will restrict our ability to deliver what the market needs.”

Business property rates

Nicola Almond, Head of Research at Currell, said: “The most likely move in the property sector is some mitigation of the impact of rising business rates. Business secretary Sajid Javid has already promised help worth ‘hundreds of millions’ for the many small businesses affected, many of which are facing rises in the region of 400%.”

Lucy-Rose Walker, CEO, Entrepreneurial Spark said: “The planned business rate hikes will have a major impact on start-ups and scaleups, pushing many entrepreneurs into financial distress. The current system penalises those with large premises, whereas we think entrepreneurs should be encouraged to invest and help bring our business parks and commercial and industrial zones back to life.”

Infographic: What the British public want from Theresa May



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