Our own industry’s upheaval over recent years has been no less dramatic than the turmoil at Westminster.
The political earthquake has seen Boris Johnson become Conservative leader: what will this mean for our industry when he takes over the reins as Prime Minister tomorrow?
Johnson made housing a central plank of his policies when London Mayor and won some praise for his housebuilding record in the capital; then, during this summer’s leadership campaign, he made much play of slashing stamp duty and possibly even shifting it from buyers to sellers.
He remains an unknown quantity, however, on many of the biggest challenges facing the industry: the regulation of agents, the scrapping of Section 21, how we can improve the house buying process and so on and on.
We’ve asked a panel of leading industry experts to give their views on what we might expect from a Boris Johnson premiership and from the new housing minister, the 18th in little over two decades.
We send our thanks to our experts for contributing and we hope you’ll leave your own predictions and comments too. One thing’s for sure - it’s all change, yet again…
Lisa Simon, head of residential at Carter Jonas:
Boris Johnson’s proposed reforms could inject some life and much needed momentum back into the property market. Brexit has continued to be something of a grey cloud that has loomed over the top end of the market for nigh-on three years now and it remains the driving force behind instability in the market, particularly in Prime Central London.
The thought of Britain departing the European Union without a deal has been an ongoing concern amongst our clients. That said, one eventuality that could leave the prime pockets of the market feeling more unsettled is the potential of Number 10 opening its doors to a Corbyn government.
Without being able to rule out the possibility of a general election – and thus a Labour administration – speculation alone has already begun to stunt the top end of the London market, with a small handful of clients deeming the risk too high at this moment in time.
Other promises from Johnson around the relief of onerous taxes must also be seen as a potentially positive move for the market – but this all hinges on whether or not the Conservatives can hold their position as the leader and prevail against the opposition in the event of a general election.
Trevor Abrahmsohn, managing director of Glentree International:
The present draconian stamp duty levels, particularly at the higher rate, are distorting the market and deterring potential buyers from ‘taking the plunge’. This has caused a drop in transactions of up to 60% and a loss to the Treasury of over £1 billion per annum.
There has been a premature recession, particularly in the capital, and the sooner that Johnson and his new Chancellor can reduce this tax the better.
Thinking innovatively, perhaps at the same time, stamp duty could be split between buyer and seller that in aggregate could have the galvanising effect that is most needed.
Failing to deliver a form of Brexit will be an unmitigated disaster and could be the poisoned chalice that Mr. Johnson fears so much and which potentially could make his tenure at Number Ten the shortest on record.
His entire rhetoric has been based on delivering Brexit or pursuing a no deal Brexit and the political undertakers will be waiting for his corpse if he does neither. Quite apart from anything else, he needs a mandate from the country, which he will only achieve via an election and with the Brexit Party in the ascendancy, the Tory vote will be split, unless he can deliver Brexit beforehand.
Boris will not be the first or last populist trying to spread good cheer and frankly, we badly need this particularly when you listen to the likes of well-known miseries Chancellor Hammond and Mark Carney, who are quick to write off this country’s prospects.
Neil Cobbold, chief operating officer of PayProp:
The buy-to-let market has stalled due to tax changes like the stamp duty surcharge and cuts to mortgage tax relief under Section 24. If Boris Johnson is able to remove all stamp duty and land tax surcharges for landlords, he could reinvigorate the sector – especially in areas with high-value homes where we’re not seeing a lot of movement.
Although this could help the market, a pledge to cut stamp duty alone won’t be enough to counter-act losses from Section 24 and bring the leveraged buyer back into the market.
However, the emotional impact of some good news from a new government would have a positive impact on the sector.
By now, the cost of Brexit has been priced into the market. We’ve already gone through enough periods of thinking we were going to leave, so the industry will be indifferent to the October deadline, adopting the attitude that either something will happen or it won’t – it’s out of their control.
The only parts of the country that could be affected are London and other immigration hotspots, especially if the government wins its Right to Rent appeal in the High Court.
Boris can be a divisive figure, so I don’t think he will have an overwhelming influence, one way or the other. More important will be any positive changes in the economy, who he appoints as the Secretary of State for Housing, Communities and Local Government, and how actively the person engages with the industry.
Something that would help the industry would be if he overturned Section 24, but it’s doubtful that will happen. As we now have such a large private rented sector, it’s too much money for the Treasury to give up.
Ed Mead, founder and chief executive of Viewber:
BoJo has the potential to affect the housing market in a way few Prime Ministers have since Maggie. He works with sentiment and particularly in London, that’s a major driver.
Brexit is baked in to most people’s negativity - anything that unblocks the log jam will be a positive.
Camilla Dell, managing director of Black Brick:
A move to reverse the stamp duty increases put in place by George Osborne, when the top rate increased from 7% to 12%, would be very good news, particularly for the London market which has been suffering from an onslaught of tax hikes on property since the end of 2014.
We would welcome a review of current property taxation, particularly the 3% surcharge and proposed 1% additional charge on foreign buyers, which has had the effect of pouring glue into the market and resulting in a dramatic fall in the number of transactions happening on an annual basis.
Furthermore, a move to cut stamp duty on homes below £500,000 would clearly benefit the first-time buyer market. In our opinion, this should only apply to first-time buyers and not investors.
However, the market needs to treat promises made by Boris Johnson with real caution.
Ian Wilson, chief executive officer of The Property Franchise Group:
It would be good if the UK government had a housing policy, but I’m not holding my breath, we have not had one for decades now.
What we have had is fiscal policy with housing effects such as higher stamp duty and tax raids on buy-to-let. Boris’s track record on housing in London when he was Mayor is not good, yes there was a lot of development permitted but almost no lost cost, affordable housing.
Reducing stamp duty at the mid to high-end will cheer up the posher London agents, and might even increase the tax take because properties that don’t sell don’t pay tax.
However, the UK would really benefit from a property tax on the ownership of land.
The potential tax take could be so great it could allow the government to reduce or eliminate taxes on earned income, for example, which penalise effort especially by ordinary people.
Owning land is currently taxed at negligible rates and yet land is one of the UK’s most valuable as-sets. If people had to pay tax on land, whether it’s being used or not, then it encourages it being brought into use. Tax breaks for some uses, such as affordable rented housing, or wild flower meadows if we are so inclined as a nation, are then easily stimulated.
Joe Pepper, chief executive officer at tmgroup, parent company of mio:
There are several major challenges facing the UK housing market. Brexit is the one that gets the most attention, but it is also the one that is furthest from the reaches of the housing industry to influence.
The nation is split in its opinion on the way forward, although there’s a large majority that want the issue dealt with quickly.
The challenge is that the easiest answer to that question and the one Boris Johnson has championed, is to leave with no deal on October 31, but it sadly does not necessarily achieve the wished-for outcome.
A no deal Brexit would undoubtedly cause short-term challenges to the economy and it does not deal with the issue that we will then seek to negotiate ‘a deal’ from outside the European Union, and this may prolong the agony for years to come.
Away from Brexit, the new Prime Minister must address the planning laws, which were implemented in the 1980s at a time when we expected the population to reduce rather than grow, if we want to deal with the supply and demand dynamic which has had such a massive impact on affordability.
Looking forward, all that’s certain about delivering on either Brexit or the changes required to the UK housing market is that it will require exceptionally strong personal leadership. Let’s hope Mr Johnson is up to the challenge.
Iain McKenzie, chief executive officer of The Guild of Property Professionals:
I am in favour of anyone who is going to improve sentiment or confidence in the housing market. Current economic data is strong but it is the uncertainty of Brexit which is causing stagnation in the market.
Any positive move on stamp duty or the additional taxes on landlords would be welcomed.
We wholeheartedly support the government’s most recent proposals for strengthening redress and regulating the industry, giving consumers greater confidence that whether buying, selling, letting or renting a property, they are dealing with a professional agent and there is a clear route to redress in the event of a dispute.
However, the one big thing I would like to see happen in the future is the removal of the housing sector from parliamentary control. It should no longer be a political football kicked around by any party to gain political favour. To deliver much needed change, we need stability and clarity of direction.
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
Increasing transactions and supply – particularly of affordable homes - is paramount for the new Prime Minister, because these are so important to jobs and social mobility as well as the wider economy.
Despite recent changes, stamp duty remains inefficient and a barrier to sales.
Higher-end taxation is stopping activity from top to bottom, but we do not anticipate much of a reduction in stamp duty unless at least an equal and opposite benefit is given to first-time buyers.
The idea of switching stamp duty liability from buyers to sellers is more progressive, although sharing liability between buyer and seller may be a compromise following thorough consultation.
Boris suggested raising the stamp duty limit to £500,000 which may increase transactions in London and the South East but could prove inflationary and reduce activity in less expensive areas as buyers seek to take maximum advantage. One way of financing the changes would be to establish additional council tax bands and a revaluation which might generate more revenue, as well as creating a fairer system.
The government’s pre-occupation with the ‘tenant vote’ is understandable but without enough landlords offering properties of sufficient quality who are able to take back their property relatively easily with genuine reasons, upward pressure on rents will remain.
Boris’s positive outlook could assist market confidence, at least in the short-term, which has been plagued by uncertainty about Brexit and political direction for more than three years.
Let’s hope a reasonable balance can be struck and verifiable solution found soon.
Fraser Slater, chief executive officer of Ludgrove Property:
As a low-tax Conservative who has described stamp duty as ‘absurdly high’ and in need of reform, it seems highly likely that Johnson will revise stamp duty in his mooted ‘pre-Brexit’ September Budget.
Depending on the size of the tax reduction, this will go a long way to resolving the broken market in London and the South East.
A significant cut will ‘un-gum’ property chains at the top-end leading to greater liquidity throughout the market, as well as a more efficient use of the existing housing stock.
Lower transaction taxes will also encourage the conversion of tired stock to modernised rental units by investors and new housing starts by developers. Looking at history, a top stamp duty rate of 4% would be the optimal level (versus 12% today).
The last time the top rate was 4%, London property transactions were 94% higher at 175,870 compared to 90,316 transactions in 2018. Furthermore, we agree wholeheartedly with Mr Johnson’s sentiment that tax cuts can create more tax revenue. Our research shows that a cut in stamp duty will actually generate more overall tax revenue through increased transactions and property-related business activity (stamp duty, VAT, corporation tax and employment taxes).
Richard Rawlings, agency trainer and co-founder of AgentMasterclass and The Lead Hub:
There was a time when the property market was directly affected by a forthcoming election, budget or other politico/economic issue. Those of us who were in agency in the 80’s and 90’s knew that the market would virtually come to a halt in the weeks and months before such events.
However, even though the political debacle of both Brexit and the way in which the government has (mis)handled it have been almost beyond belief, in terms of day-to-day life, the British are as resilient as ever. We are known for our “keep calm and carry on” approach to any inconveniences, however major they may be. We are perhaps becoming less concerned about 'the market' than we are about our own housing needs and preferences, irrespective of who’s at No.10.
Obviously if a homeowner is directly affected by a Brexit-related factory closure or business relocation, it would be understandable for them to reconsider a move. Changes to taxation and stamp duty could also affect affordability and hence property prices, but since when have estate agents been concerned about those, if transaction volumes, already at rock bottom, are unaffected?
Confusing times create the opportunities that smart estate agents should harness!