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Housebuilders React To Budget Impact On New Homes

Posted 4 March 2021 by Keith Osborne

There's been a range of reactions to the government's big announcements on Stamp Duty and guaranteed mortgages...

Chancellor of the Exchequer Rishi Sunal confirmed a number of rumours on property market policies in his official Spring Budget speech and housebuilders have reacted to the announcements regarding Stamp Duty and low-deposit mortgages. Some are very happy, while other believe these are not the right steps and that there have been some missed opportunities to make effective, long-term changes.

Adam Lawrence, chief executive of award-winning developer London Square, with a range of schemes across Greater London, said: “The Chancellor has missed an opportunity by only tinkering with Stamp Duty. It needs a total makeover. It’s good to see that the deadline has been extended but there now needs to be a move to scrap Stamp Duty altogether to continue to encourage people to move home at all levels of the property ladder. The mortgage guarantee scheme will help first-time buyers and those buying under the £600,000 threshold. However, until we get the top end of the market moving, we won’t see the opportunities needed on the lower rungs – and that means Stamp Duty reform.”

Ian Ruthven, managing director at Barratt Developments Yorkshire West, commented: "The Stamp Duty extension will help thousands of people complete the purchase of their homes over the coming months, supporting the housing market at a time of uncertainty.”

Josh Chadd, founder of Tailored Living Solutions, commented: “The SDLT holiday that was introduced in last year's mini-Budget had a tremendous impact on the property market and proved a real incentive to those that wanted to purchase a new home. Therefore, the Chancellor's decision to extend the holiday is welcomed and will allow the market to keep moving until the restrictions are fully lifted and the way we operate can return to normal.”

John Tonkiss, CEO, McCarthy Stone, commented: “While this decision is the right one for the short term, we need a better long-term solution for retirement communities. Stamp Duty is a key reason why older people don’t move, yet we know millions are keen to downsize. Exempting last-time buyers moving into retirement communities from paying Stamp Duty would help many more live in housing suited to their needs, bring down public health bills and free up the housing chain for younger people. It would be a win for everyone.”

Henry Smith, CEO of Aitch Group, said: “We welcome the extension in its fairness as it addresses the fact that the conveyancing and property transaction system were overwhelmed by the wave of demand that hit after the first national lockdown, and kept on coming. This has created a backlog of transactions, many of which will have been delayed and could have unfairly missed the original deadline. However, we want to help oil the wheels further for buyers during this lengthy period of financial instability by offering a double Stamp Duty saving until the end of the extension.”

Guy Burnett, executive director of development at Metropolitan Thames Valley Housing, said: “It’s vital that the Chancellor extends the Stamp Duty holiday to prevent the housing market grinding to a halt. The temporary tax relief has been vital in keeping the property market going, and a sudden stop would be devastating to buyers at all levels. A gradual easing of the Stamp Duty holiday as the economy recovers will allow buyers to better prepare and the housing market to become less dependent on its current lifeline. This is particularly important given that we are also about to transition into a new Help to Buy scheme. Whilst the scheme will spend its remaining two years supporting first time buyers which is a positive, we cannot dismiss the fact that the changes will leave many buyers stuck in smaller homes unable to afford to upsize. The Chancellor needs to consider the effect this toxic combination of removing two support schemes will have on the property market, which still requires government support to continue its recovery.”

Chris Loughead, development director for Fernham Homes, commented: “It’s great to hear that the government will be offering increased support for buyers purchasing homes up to £600k. The extension of the Stamp Duty holiday deadline should help enable those who are at risk of missing out on the relief from delays and prevent more fall-throughs, but this is just paper over the cracks on an archaic system of taxing that is in desperate need of modernisation. I would like to see the Chancellor consider a fairer version of the Stamp Duty tax going forwards, keeping transactions under £500k exempt indefinitely, and to look at measures that would enable equity-rich, cash poor downsizers to move, freeing up larger homes for growing families. We expect that the new mortgage guarantee scheme will accelerate the emerging trend of buyers skipping a rung in the ladder, reinforcing the decline in demand of one and two-bedroom flats that we’ve already seen since lockdown. We anticipate a surge in demand for three-bedroom homes in particular. I think there is a real possibility that this trend could lead to an overall change in strategy from mass housebuilders, instead concentrating on building family houses priced under the £600k threshold, rather than multiple units of flats, which in the short term could potentially lead to disproportionate supply issues that cannot meet this increased demand.”

Dean Clifford, co-founder of Great Marlborough Estates, said: “Homeownership remains the aspiration for the vast majority and it is right that the government's housing policy looks to support that. These government-backed mortgages will help first-time buyers get onto the housing ladder and drive activity as the Stamp Duty holiday and Help to Buy are wound down. Yet encouraging banks to lend to first-time buyers can only ever be part of the solution. Too much demand-side stimulus without increasing supply risks stoking an unsustainable housing bubble. The bigger picture involves increasing housing delivery across the board which can only be achieved by having a better resourced and designed planning system.”

Bjorn Howard, group chief executive of housing association Aster Group, said: “This Budget definitely contains some positives for housing. The 95% mortgage guarantee, an extension of the Stamp Duty holiday – are policies which show a government that is set on making housing and homeownership accessible to more people. On the latter, I urge the chancellor to ensure Shared Ownership buyers also benefit from the holiday.”

Ed McCoy, director of sales and marketing at Barratt London, commented: “The mortgage guarantee scheme offers confidence for lenders to help families take a first step on the property ladder, widening homeownership and enabling industry to increase housing supply, building more homes and creating more jobs and economic growth across the country. The Stamp Duty extension will also help thousands of people complete the purchase of their homes over the coming months, supporting the housing market at a time of uncertainty.”

Dean Markall, sales and marketing director at Martin Grant Homes, commented: “The planned 5% deposit mortgages for all buyers will act as a safety net to catch those who may have otherwise seen their dreams of homeownership slip away once the Help to Buy regional price caps come into effect. We welcome the immediate availability of these mortgages and anticipate first-time buyers in particular will benefit from this incentive. There will need to be further clarity from the Chancellor on how these mortgages will be guaranteed, and exactly how many providers will offer this scheme given that there are currently so few 95% mortgages available.”

Peter Truscott, chief executive at Crest Nicholson, commented: “We’re looking forward to seeing the positive impact of the mortgage guarantee scheme, which will give buyers who previously felt locked out of the market, the ability to access the lending they need. Housebuilding employs lots of people directly and through its supply chains, so it’s encouraging to see the government support an industry which has demonstrated its resilience over the past 12 months.”

Chairman of Strawberry Star, Santhosh Gowda, said: “We hope the extension of both the Furlough scheme and Stamp Duty holiday will encourage confidence and stability in the economy for the next six months at least. Although we’ve seen 90% mortgages slowly return to the market since January after nearly disappearing altogether when the pandemic first struck, raising a 10% deposit is still a real challenge for many, especially for those in the South East where the average house price to income ratio is at its highest level since 2011. A 5% deposit is certainly more achievable, and we welcome the government’s effort to help buyers realise their home owning dreams. It will be interesting to see the eligibility criteria and how this differs per lender. Given the risks associated with high-LTV deals, you can sensibly deduce they will be much stricter.”

Daniel Smith, managing director at Barratt Developments Yorkshire East, commented: “The mortgage guarantee scheme offers confidence for lenders to help families take their first step onto the property ladder, widening homeownership and enabling the industry to increase housing supply, whilst building more homes, creating more jobs and boosting economic growth across the country.”

Mark Booth, managing director of Hayfield, said: “It is pleasing to hear that properties under £500,000 will continue to be exempt from Stamp Duty until the end of June. So many property transactions have experienced unforeseen delays due to the pandemic, so this is very welcome news and will alleviate the stress so many have been experiencing. The introduction of government guarantees for lenders who offer 95% mortgage products to those buying a home under £600,000 will be a big financial help to lots of people who are looking to move onto or up the property ladder. Moving to a beautiful new home with modern living space, purpose-designed work space and easy access to the great outdoors will now be within the affordability of more buyers. This is particularly the case for renters who can be trapped paying high monthly rental payments, which makes saving for a deposit very challenging. We were also encouraged by the Chancellor’s climate change measures, as protecting our planet for future generations is at the centre of Hayfield’s Green Revolution Pledge. We welcome the new initiatives the Government is instigating to significantly reduce carbon emissions and create greener homes across the board.”

Jordan Rosenhaus, chief executive at Goldman Sachs-backed modular housebuilder TopHat, believes more needs to be done to reduce environmental effects: “I welcome Rishi Sunak’s green-tinged Budget, but it was disappointing to see that policymakers are still failing to address the problems caused by consumers’ unwillingness to change old habits – especially in relation to how they live in their homes. For a step change to happen now it will require a cocktail of government grants and incentives – not like the Green Homes Grant, which has crashed and burned, but more like basing a home’s council tax bill on its energy performance. Lower Stamp Duty for properties with higher Energy Performance Certificate ratings is also an example of how to encourage developers to improve the energy performance of their new homes. This would echo the tax incentives available to the motor industry and electric cars.”


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