The property industry has reacted to today’s Budget with a wave of disappointment, as housing was ignored by the Chancellor of the Exchequer Philip Hammond in his speech to Parliament, leading many to talk of a “missed opportunity” to start to rectify some of the faults with the UK property market.
Here we take a look at some of the comments from a range of industry experts…
Robert Fraser, managing director of estate agents Fraser & Co: “The industry will be disappointed that another opportunity to reform stamp duty has been overlooked by the government. The impact of this counter-productive tax arrangement is being felt at every level of the market, from international investors, to downsizers and first-time buyers, where prices at the higher end are faltering and competition at the lower end of the market is intensified.”
Lynda Clark, CEO of First Time Buyer: “Given increasing house prices, stamp duty is now paid by three-quarters of first-time buyers and so it raises the question who does the current stamp duty exemption actually help? Pivoting stamp duty and ensuring it is paid by the seller would certainly be a very clear cut way of removing stamp duty costs for first-timers without putting additional pressure on.”
Paul Smith, CEO of haart estate agents: “Today’s Budget marks another missed opportunity to create fundamental reform to the UK’s long-suffering property market. The housing minister merry-go-round has left housing issues at the periphery of government thinking and strategy. Continually kept at an arm’s length, they’re incapable of tackling the deeper-seated issues within housing market – leading to a plethora of initiatives that that tamper with rather than tactically reform the market. What we really need to see are stamp duty holidays and tax reliefs to increase investment opportunities, expanding the pipelines of housebuilders and introducing fluidity into the market.”
John Goodall, CEO and co-founder of Landbay: “For all the talk of easing the pressure on affordability in last month’s housing white paper, Hammond’s Budget was underwhelming to say the least. By not raising the stamp duty threshold, the Chancellor has missed a valuable opportunity to improve access to the housing ladder for millions of aspiring homeowners in the UK, for many of whom the tax is the final straw when facing prices that continue to climb. I hope the situation is reviewed in the Autumn Budget.”
Michelle Niziol, director of IMS Property Solutions: “The Chancellor should have used today’s Budget to announce new measures to speed up housebuilding and cut planning red tape, as well as announce changes to the stamp duty tax system. The lower threshold should be increased to become better aligned with today’s average house price as this would help stimulate more movement at the bottom of the house market. The government should also look to move the cost of this property tax from the buyer to the seller. I would also have liked to see the Chancellor scrap the planned cut in tax relief on mortgage interest payments for buy-to-let landlords.”
Founder and CEO of eMoov.co.uk, Russell Quirk: “Zip. Nada. Zilch. Nothing. A bitterly disappointing, lacklustre Budget by Mr Hammond in terms of addressing the current UK housing crisis. It is clear he is continuing the head-in-the-sand approach of those before him in bypassing the issue, with a few headline-grabbing business initiatives and the usual proclamations about how great the economy is currently performing. Ironic that a former property developer should give the subject such inadequate focus within his plans and woeful for those aspirational buyers on the ground still dreaming of getting on the ladder.”
Edward Heaton, founder and managing partner of property buying and search agent Heaton & Partners: “I cannot believe that there wasn’t even a mention of housing in today’s Budget! I would have loved to see the Chancellor get rid of the 3% surcharge for second homes and reduce the overall stamp duty rate for high-end properties by making it a flat rate today, but sadly I think this is a pipe dream of those operating in the prime market, who are witnessing it continue to be stifled by stamp duty. What the Chancellor doesn’t seem to realise is the profound effect that it is having on the rest of the market.”
Steven Way, practice principal at Collier Stevens Chartered Surveyors: “I would have liked to see the Chancellor address the inequality in VAT between new builds (0%) and renovations (rated at 20%) in today’s Budget, but to not even mention housing at all was totally bizarre. The VAT system, as it stands, is a complete muddle, particularly from a building practitioners point of view. For new builds, it is clear cut, but when it comes to listed buildings and accessibility projects, there seems to be no hard-and-fast rules for professionals on those which are rated at 0% and those which are not. George Osborne made the peculiar decision to increase the amount of VAT relief on maintenance work to listed buildings in 2012, but not to any new work. We are still reeling from this. If we want to maintain the country’s built environment and heritage, the Chancellor should be looking at a new VAT regime.”
Glynis Frew, chief executive of Hunters Property plc: “The real underlying issue in the housing market is affordably priced homes. The recent Housing White Paper proposed more starter homes for first-time buyers, we were keen to hear more on how and when these homes will come to fruition. The housing minister should join the Cabinet. This would give the issues associated with housing a lot more profile across government. Personally I would welcome regulation of the industry so all agents operated on a level playing field. Stamp duty should be slashed for first-time buyers, it is absurd to think first time buyers in London. We are disappointed to see tax relief for landlords is still due to be cut next month. The buy-to-let market has already seen a substantial hit from the second home stamp duty levy and this further strain on landlords will undoubtedly adversely affect the property market.”
David Thomas, chief executive of Barratt Developments plc: “We applaud the measures announced today to support the UK’s economy, particularly on skills. With 350,000 workers having left construction since the financial crisis, there is a real need to bring in more young people into the industry with new skills, so the announcements today are important.”
Jeff Doble, chief executive of London estate agents Dexters: “Current stamp duty levels are a tax on free movement in London and it is massively disappointing that the Chancellor has chosen to ignore this. Families who want to buy a family home in London, perhaps moving from one area to another to buy a larger home for a growing family or to be closer to schools or work, are being penalised and many are opting to stay put to avoid paying punitive stamp duty in the £1.5m to £3m price bracket. The upper price brackets of a family home in central London, between £5m and £10m, are being hit with an aggregate of 15%. This has reduced transactions substantially, impacting on the level of tax collected by the government and is therefore damaging the economy. In addition, there is an entire eco-system built around moving house, from removals companies to furniture suppliers, from interior designers to painters and decorators. All these businesses are being hit by the government’s refusal to reform stamp duty.”
David Hannah, principal consultant, Cornerstone Tax: “With real estate representing 21% of the UK economy, it is a mystery as to why the government persists in hindering a crucial sector, by creating an unnecessary burden on tenants, landlords and homeowners. I would urge the government to stop their obsession with homeownership and think carefully about what our country really needs – an accessible, flexible and affordable housing supply. The private rental sector, where buy-to-let landlords are a major contributor, provides just that. As for future challenges, the growing popularity of zero-hour contracts where it is near impossible to obtain a mortgage, will impose further pressure on the rental market. Interestingly as the UK Government is the widest user of these contracts, it remains to be seen where they anticipate our public-sector workers will be able to live.”
Henry Smith, CEO of Aitch Group: “Another golden opportunity to address the ‘elephant in the room’ has gone amiss. The government has yet again chosen to ignore the effects of a stamp duty levy which is damaging the UK property market, as well as reducing the government’s own tax takings. Lower receipts, reduced transaction volumes and a slower rate of housebuilding have come to define a policy that prevents the housing industry from performing its role effectively. Whether it’s developers, agents, architects, contractors or investors, the negative impact of stamp duty is having an impact across the industry and it is no surprise that leading figures and bodies are demanding a change.”
Robin Paterson, joint chairman and CEO of United Kingdom Sotheby’s International Realty: “After countless calls from the industry for stamp duty reform, I am disappointed to see the Chancellor has continued to ignore the issue. At the very least, the Chancellor should have reduced second home stamp duty on buy-to-let properties and kept the rates as they are for those with multiple homes they use as residences. These landlords are providing much needed rental accommodation, especially in densely populated cities such as London. The more the government picks on the landlord the more rental prices will increase and home ownership will continue to decline.”
James Davis, CEO and founder of online lettings agency, Upad: “It must be a first that there was no mention of housing in today’s Budget. In particular, it was disappointing to not see a U-turn on the catastrophic decision the Chancellor made in the autumn to ban lettings agent fees. As predicted, rising rents are already on the cards for long-suffering tenants with renting now a necessity, as home ownership is out of reach for most millennials. Landlords have been used as a political football in the last 12 months, with buy-to-let taxes set to increase from April and no announcement of this being blocked today. Landlords need attracting back into the space rather than being pushed away.”
John Morley, managing director, JOHNS&CO: “The government has once again ignored the views and appeals made by the industry to reverse this counter-productive tax arrangement, which will come as a disappointment to many. Stamp duty hikes have affected the entire market, both on an international and domestic level, slowing transactions and causing many potential purchasers to put off moving altogether due to the significant costs that come with buying a new property. Although the market is steady and resilient, it is being prohibited from reaching its full potential and fulfilling the increasing demand for affordable homes; it is a shame that an opportunity to significantly boost the UK economy has been missed today.”
Stephen Stone, CEO of Crest Nicholson: “It has been a quiet Budget from the housebuilding industry perspective, however, it’s encouraging to see the Chancellor acknowledge the need for greater investment in skills training; especially fitting during National Apprenticeship Week. The inclusion of construction as one of the fifteen occupation areas identified under the new T-Level is a welcome development and it’s heartening to see acknowledgement of the need for greater investment in skills training in the construction sector.”
Danielle Cullen, managing director at StudentTenant.com: “Hammond has delivered yet another limited speech where the property market is concerned. In fact, no word at all on anything relating to the housing market, and no elaboration on the comments he made in the Autumn Statement. Pledges were made last November to plough money into the construction of new housing for Help to Buy and Shared Ownership schemes, but any hope of reversal of stamp duty charges on second homes have been scuppered with no further mention of anything property related at all. The government seem to be continuing to favour developers and big businesses building more properties and making more money, whilst penalising regular people who are purchasing buy-to-let properties as an investment or retirement income.”
Rory O’Neill, head of residential at Carter Jonas: “A reduction in stamp duty is the final catalyst the property market needs to boost transactions, yet the Chancellor has again missed an opportunity to make the necessary reforms with the Spring Budget. With vendor reluctance to adjust asking prices and an emerging reliance on overseas money to inject liquidity into the market, we are willingly cultivating a precarious residential property market. Which leads us to question why our new Chancellor, who reportedly made his fortune through property, has bypassed yet another opportunity in the Budget to revise stamp duty thresholds – both on properties priced over £937,000 and on buy-to-let investments.”