When it comes to Budgets and Property, you have to hope that the old adage that ‘things happen in threes’ turns out to be true.
In other words, we don’t want a fourth Budget on the trot that causes ructions in the industry.
In December 2014, after years of saying that governments of all hues had ignored pleas to reform stamp duty, George Osborne radically overhauled it.
And whilst London agencies with money to spend on public relations made high-profile headlines about the ‘damage’ to the high end of the market, let’s remember that Osborne’s reforms actually made house purchase cheaper for the majority of buyers.
Then in summer 2015, not long after the general election, there was a second successive Budget shock when Osborne revealed mortgage interest tax relief on buy to let properties would be restricted and the taken-for-granted Wear & tear Allowance would be made applicable only if landlords could produce receipts.
This caused genuine unhappiness, not least because those hurt most by the mortgage interest change were seen as aspirational private landlords – that is, the backbone of Conservative supporters.
Thirdly and most recently, there was the Autumn Statement Budget of last November when the ‘additional properties’ stamp duty surcharge was announced.
Although in reality this is more damaging to the wealthy than to the many, it is seen by the industry as another knife to the heart of the middle class wanting to snap up a buy to let or a holiday home.
Whatever one thinks of these initiatives – and clearly the vast, vast majority are unhappy with at least the more recent two measures – there is a feeling now that enough is enough. No one wants a fourth Budget to send shockwaves through agency and property.
Well – don’t bank on it.
My bet is that Osborne cannot resist taking another look at property, although I suspect he may not be quite as villainous as in recent Budgets.
I have no crystal ball, nor anyone leaking from the Treasury, but I calculate he may touch upon four things:
1. Stamp duty surcharge: the Treasury has gone on record saying Osborne will finalise the details of the surcharge in Wednesday’s statement. My guess? He will keep the surcharge but may delay or phase its implementation.
He’ll also soften the currently-vindictive distinction between small scale buy to let owners (who must pay three per cent more) and large-scale investors (who escape the surcharge if they are bulk-owners and bulk-buyers of homes to be let).
2. Mortgage interest tax relief for landlords: he does not have to mention this again (it’s being phased in from next month so he could ignore it) but my guess is that with a high-profile legal challenge being considered, led in court by Cherie Blair QC, he might just tinker with his previously-stated proposals.
The effect of this will be to soften the blow, and to oblige those behind this challenge to spend more money (which they may not have) on refining their legal case. So…expect the odd tweak.
3. Capital Gains Tax: if there’s going to be a big property shock, then this will be it. But it’s a big ‘if’ and my guess is that Osborne will ignore it. If he doesn’t, then there is a groundswell of opinion amongst some ‘wet’ Tories (and of course amongst Labour, LibDem and SNP MPs as well) that CGT on profits for ‘additional homes’ could be raised.
4. House building: This won’t strictly be an issue of direct or immediate concern to agents but expect more high-minded announcements to encourage more house building. Few can dispute the need for such motherhood-and-apple-pie platitudes but, as housing minister Brandon Lewis is already finding out, it’s easy to ask developers to deliver but harder to get them to do it.
Even so, expect new planning and land-banking measures and maybe even some kind of extension to Help To Buy, which government back-benchers see as a success.
If I am right on most or all of these forecasts, feel free to praise me in glowing terms.
If I am wrong, then by good fortune I am actually on holiday during Budget week so will not be around to see the fall-out of my errors.
However, I am leaving Budget coverage in the more-than-capable hands of my colleagues at Estate and Letting Agent Today, which remains THE place to see what is announced and how our industry reacts – even if it’s fourth time unlucky when Osborne starts talking…
*Editor of Estate Agent Today and Letting Agent Today, Graham can be found tweeting all things property @PropertyJourn