Budget 2016 reaction - what the property industry has to say 

Posted 17 March 2016 by Keith Osborne

WhatHouse? gathers 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. The leading experts in the property industry have been quick to give their thoughts...

Ian Wilson, CEO of Martin & Co plc: “Reducing capital gains tax to discourage further growth in the private rental sector is poor policy making, which simply opens a golden window of opportunity that could encourage people to buy second homes or buy-to-let properties. Currently, buy-to-let properties appeal because of the mix of rental returns and capital gains particularly in London and the South East. Reducing CGT is another incentive to buy. Some landlords might be interested in selling to make the most of this window, but if the properties have a strong track record of staying fully let at good rents then the most likely buyer will be another landlord. We are heading towards consolidation of ownership amongst landlords, who will set up companies to avoid additional tax implications and continue to make additions to their portfolios - the reduced Capital Gains Tax burden on exit will simply fuel this.”

Glynis Frew, managing director of Hunters Property Group: “Anything that moves the Northern Powerhouse forward will help all aspects of the economy across the country. The region is expanding rapidly whilst strengthening the economy and appropriate infrastructure is needed to support it. It is nonsensical to keep a part of the nation which can support the economy as divided as this and we welcome these new plans.

“The north currently has very strong lettings and sales markets due to strong price growth, high rental yields and cheaper rents in comparison to the South. The market has experienced a 35% increase in buyers looking to invest in The North and this can be partly attributed to previous investment in the region. We have seen this in Yorkshire, Merseyside, Sheffield and Manchester, to name just a few locations.

“We welcome the Chancellor’s plans to reduce capital gains tax. We believe this will encourage homeowners to sell their second homes and buy-to-let properties, which is crucial in getting the market moving again.”

John Elliott, managing director at Millwood Designer Homes: “Apart from funding for the much-anticipated Crossrail 2 and strengthening of the Northern Powerhouse, what the Chancellor said today was old hat. Disappointingly, nothing new or valuable for the property market was introduced.

“I still think that it is wrong to add 3% tax onto second homes or Buy-to-let. It will most likely have the effect of subduing the property market. It is hard to see how it will make a difference to the balance of property available on the market for other buyers. “

Robin Paterson, chairman of UK Sotheby’s International Realty: “The reduction in capital gains tax reduction is good news for the housing market as it will encourage people to sell their second homes and buy-to-let properties, particularly in London where the top end of the market has slowed. The stamp duty changes have probably affected the market more than the Government expected and the easing of capital gains will be seen as a more astute solution.

“I am pleased that the chancellor has announced that Crossrail 2 construction will go ahead. This is excellent news for the capital as we will see pockets of accelerated growth emerge, much like we have seen around Crossrail stations such as Ealing and Slough. The new route will provide a huge boost to neighbourhoods such as Clapham and Tooting in the south, cutting journey times to the City of London in half and I would expect a future jump in prices to reflect this.”

Graham Davidson, managing director of Sequre Property Investment: “Money has always followed transport and the announcement of much needed East-West connectivity improvements in the region will pave the way for further investment, creating more jobs and opportunities. This will result in increased demand for property, providing a positive outlook for buy-to-let investors who are chasing returns that have been squeezed out of London and the South East.

“Since the Northern Powerhouse agenda was first touted two years ago, our own business has seen a circa 30% rise in interest in northern property at a granular level – with many  millions being invested further up the chain at a global level in residential and commercial projects. The message is more clear than ever; the north is open for business.”

Russell Quirk, eMoov CEO and former Brentwood First councillor: “A very disappointing budget from a property point of view and for UK buyers and sellers. The capital gains tax reductions, whilst bold, are a missed trick and a kick in the teeth for those second home-sellers that will not benefit from a reduction in capital gains tax on their property sale. This was hardly a budget to assist hard working people with more than one property, not to mention Mr Osborne’s total failure to address the issue of housing supply that has been touched upon in previous budgets.

“The move to apply new stamp duty changes to larger institutional investors, as well as smaller Buy-to-let landlords, is a fair one, although I believe this was probably an oversight from last year and nothing to shout from the rooftops about.”

Edward Heaton, Heaton and Partners: “It was no surprise that the Chancellor failed to make any changes to the stamp duty threshold which continues to stifle the top end of the London market. Indeed, the 3% surcharge on second homes will only accentuate that over the coming months.”

Jonathan Stephens, Surrenden Invest: “Today’s announcements by the Chancellor will have come as no real surprise to those looking to buy an investment property in coming months. George Osborne has maintained his earlier pledge on stamp duty, holding strong on the changes already announced, which in turn means that those investors with their fingers on the pulse will not have experienced any kind of real shock to the system today.

“Giving the green light to the HS3 Manchester to Leeds line will also massively grow investment prospects in the Northern Powerhouse, improving transport links and high-speed travel. Overall, I would say that this budget has confirmed that there is no better time to look north, however, with the dream buy-to-let conditions created for the Northern Powerhouse.”

Steve Sanham, development director at HUB, said: “As Crossrail 1 has demonstrated, major infrastructure projects can have a serious regenerative effect and unlock new opportunities for housing by boosting connectivity within cities. Investment into key infrastructure like Crossrail 2 is infinitely more useful in helping to deliver real affordability into the market than many of the short-termist housing initiatives we have seen recently. Opening up new areas of London as viable locations for housing will increase choice for hardworking Londoners looking for sensibly priced homes.

“A threshold on how many homes the stamp duty surcharge applies to is also crucial for institutional landlords and investors. The aim of delivering more homes will not be achieved if investors are put off from creating large developments of new homes to begin with."

Julian Goddard, Daniel Watney: "By continuing to squeeze private landlords with new regulations and taxes at a time of soaring rental demand, the government only risks exacerbating problems within the private rented sector. 

"The growing burden placed on landlords may cause many to exit the market causing a crunch in supply and a spike in rents - the last thing renters need, especially in London."

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