Budget 2017 – DBPR asked London property experts to give their immediate reaction to Chancellor Philip Hammond’s budget…
David Lee, Head of Sales at Pastor Real Estate
It appears Philip Hammond really seems to understand the housing problem
The budget today is largely positive, particularly by comparison to those in recent years. It appears Philip Hammond really seems to understand the housing problem – the UK needs consistently to build more houses, year on year, to improve affordability and his promise to commit £44 billion over five years to tackle housing is a clear demonstration of this. The major problem with house prices in the UK is a supply/demand problem. If the government can help, in particular working with the private sector, to build more houses this will benefit everyone.
The abolishment of stamp duty for first time buyers will clearly be helpful for people to get onto the property ladder. However, we had hoped that there would be further stamp duty and wider tax reforms to rejuvenate the residential property market in the UK because this is what we view as the key problem in our market at present. It is great that the Chancellor recognises the need for productivity in the UK to improve, hence increasing salaries. From a real estate perspective this will help to stop the gap between average salaries and average house prices widening further. Previous generations did not experience the same challenges that home buyers do today with regards to saving enough to buy. We hope that first time buyers return to those in the 20’s rather than in their 30’s as it is today.
For both our landlord and tenant commercial clients, we see the proposed changes to business rates as good for business; these should make a real impact on the British economy as a whole so we see this as very encouraging for the future.
Mark Parkinson of Middleton Advisors
The long wished-for reduction in SDLT rates did not emerge
“The second half of the chancellors speech was definitely housing heavy with a stated intent to provide fresh opportunities for first time buyers and continue building homes. The long wished-for reduction in SDLT rates did not emerge and is highly unlikely to for the foreseeable future.
The abolishment of stamp duty for first time buyers under £300k is a clear step to woo younger voters which the conservatives desperately need. The other policy which will affect owners of multiple homes is the doubling of council tax for empty homes. It is important to note that this is empty homes not second homes although as ever the devil will be in the detail!”
Giles Cook of Best Gapp
The sceptic in me is concerned about how he plans to police the qualification process
Encouraging news from the Chancellor regarding the Government’s decision to abolish Stamp Duty for first time buyers on the first £300k (and in more expensive areas on the first £300k on a purchase price below £500k). However the sceptic in me is concerned about how he plans to police the qualification process.
Existing SDLT rates further up the chain continue to prevent there being any rhythm to the market and a wider reduction would have gone a long way to free up the stalled marketplace.
Charles Curran, Principal and Data Analyst, Maskells
“Housing was always going to be central to this budget; it is desperately needed and it is sound politics – appealing to the younger vote. We welcome the new homes target, the new Homes England agency and await with interest the outcome of the new commission to explore why the 270,000 planning permissions granted have not yet turned into housing starts.
We also welcome the cut in Stamp Duty for first time buyers on properties up to £300,000 and the extension of this policy to the first £300,000 out of a maximum of £500,000 property price in more expensive areas, such as London. However, it’s deeply disappointing that the rest of the SDLT spectrum was not reduced. There are a few points to consider: will this £300,000 to £500,000 maximum limit produce a cliff edge creating dead zones and property price chasms, making it hard for many to breach? Downsizers, whom we desperately need to move to free up larger housing stock, are not at a competitive disadvantage as they may be looking at the same properties as a FTB, but will have to pay more. This does not seem fair but is very political. Whilst we have the promise of new homes, what are FTB’s going to buy now, when those they are seeking to purchase from will face the full burden of SDLT as they seek to move.
Finally, what is a First Time Buyer? In the Help to Buy declaration anyone owning or having a right to occupy property or an interest in land is excluded, as is anyone who received a bonus from a Help to Buy ISA. However, in 2010 HMRC also sought to exclude anyone whose partner owned property. This is crucial and we await HMRC’s budget notes to answer the question fully.
Furthermore, the OBR anticipates that inflation will increase by 3% over the next year and then by 2% per annum thereafter; will the FTB limits increase in line with this?
The government must also consider what will happen when FTB’s cannot find homes to buy or cannot afford them under more stringent lending criteria and an increasing interest rate environment. Will their patience wane before the next election?”
Alex Newall of Barnes Private Office
The major tweak on stamp duty for 1st time buyers up to £300,000 is a huge help to those on lower income jobs struggling to save up for a deposit. With the combined input of this, £10 billion more for help to buy, and financial and training support for SME builders, a pledge has been made to boost the number of new homes from 216,000 per annum currently to 300,000 by the mid 2020s. A review of unused planning permissions will also be published in the Spring 2018, with the expectation that developers must stop land banking and free up sites for development.
This strategy to boost the largest segment of the market should encourage more investment by housebuilders and help to ease the constraints on supply. However the effects on houses price growth will be modest, as the government only starts to try to tackle the long term housing shortage in England. We expect more low cost flats being built in towns and cities across England, a change of the planning landscape to allow scheme to go ahead which are high density and high quality, near good transport links.
Those developers who were hoping that the greenbelt rules would be loosened through, maybe disappointed from the Budget today. A clear message of support for housebuilding and for 1st time buyers – get on with it – the government is here to support you financially. But don’t leave your property empty foreign owners, your local council will charge you a 100% premium on your council tax – so get it let out.
James Robinson, General Manager at Lurot Brand
“Following Jeremy Corbyn’s banquet of undeliverable promises at the last election Phillip Hammond had to woo the youth vote back and with by-elections looming he had to deliver something quite spectacular or risk losing the Government’s majority. Watching him at the dispatch box he did just that with a remarkable Budget which appeared to be all things to all people and was delivered with confidence.
However, the big problem for London is that, for political reasons, Hammond could not be seen to reward the wealthy by cutting Stamp Duty on expensive properties. Yes, abolishing Stamp for FTB’s is fantastic and will help thousands of individuals, but the change in property markets always starts from the top and ripples outwards and London is invariably the epicentre of these changes. So I fear the transactions in Central London will remain anchored to a near standstill for the foreseeable future.”
Andrew Langton, Chairman, Aylesford International
“The abolishing of stamp duty to first time buyers of up to £300,000 and up to the same amount on a £500,000 home is welcome news but there are few properties at this level in Greater London and it will have little impact on the gradual slide in values throughout London above the £5m level. £44bn in government support to boost construction to meet the target of 300,000 new homes is good news but one is cynical about this target ever being achieved as we have heard similar projections given by previous chancellors. The introduction of a 100% council tax premium on empty properties is very welcome as is the CPO on land banked properties by developers.
Otherwise a very underwhelming budget.”
Brendan Roberts, Director, Aylesford International
“Well the change to SDLT will not have any impact in Central London. No new developments in Central London that I know of have any flats priced at £300,000 or less, or for £500,000 or less for that matter and little if anything in Greater London is being developed with a domestic first time owner occupier buyer in mind.”
Edo Mapelli Mozzi, CEO of Banda Property
“The Chancellor has recognised the need to make changes and is going the right way about it by clearly addressing the issue of supply and demand. The abolition of stamp duty for first time buyers on property of up to £300,000, acknowledging that buyers in high price areas such as London need extra help is a significant step forward, as is the pledge of £44bn over five years for loans and guarantees for building.
I welcome the investment in to the sector and into skills training, infrastructure, planning reforms and his promise to look into the disparity between planning applications granted and houses actually built.
I would, however, have liked him to look at the housing market as a whole from the top down, not just focussing on first time buyers and a pledge to build more houses. By addressing the issues at the top end of the market – namely the higher rates of stamp duty – the Chancellor could have re-energised a challenging market at a time when it needs mobilising. The big urban regeneration schemes Hammond talks about might not viable without funding from the top end of the market which is currently stifled by the stamp duty escalation.”