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Property experts reveal their Autumn Budget wishlist

The housing industry has set out a list of demands in advance of the government’s hotly anticipated Autumn Budget on Wednesday. 

Despite little room for giveaways, property firms are calling on the Chancellor Philip Hammond to take measures to boost the property market and get to grips with the housing crisis. 

There has been a lot of rhetoric around housing in recent years, but now it is time for action, according to David Westgate, group chief executive of Andrews Property Group. 

He commented: “Housing issues remain critical to the UK economy and absolutely cannot be neglected in the forthcoming Budget.  

“At a time when the government should be ensuring a stable economy against the backdrop of the Brexit negotiations, a vibrant housing market would provide consumers with choice of tenure, flexibility of decisions and, of course, deliver revenue to the Treasury. 

“A stagnant market does not allow for economic or personal growth.” 

Simon Gerrard, MD, Martyn Gerrard, believes that what we need to see from the Chancellor in the upcoming Budget are policies that deliver radical change. 

“Our government and opposition have become accomplished in delivering papers and speeches on how to fix the housing market, but continue to fall short in delivering effective policy,” he said. 

Property experts reveal their Autumn Budget wishlist

From building more homes to improving the home-buying process, there are a host of housing related issues that property professionals would like to see addressed, but none more so than stamp duty. 

Gerrard (right) added: “The bottom line is that we are in a position where those looking to get on or move up the ladder are being restrained by a shortage of property and regulatory hurdles such as stamp duty.” 

Stamp duty

When rounding up what the experts believe should be included in the famous red box on 22 November, most people said that they would like to see stamp duty overhauled to help first-time buyers get a foot on the property ladder. 

“The first thing I’d like to see addressed, like many others in the property market, is changes to the increased SDLT levies of George Osbourne’s last Budget, which has hit the market like a sledgehammer,” said Caroline Takla, director at The Collection LLP. 

Some experts argue that the Treasury has increased its revenues while property prices have dropped off in some parts of the country, which was the desired effect, but Takla firmly believes that is a short-term result, adding that “the market has changed and there’s a completely different political landscape now”. 

Paul Cosgrove, partner at Finlay Brewer, concurred: “Increased tax revenue aside, it [stamp duty] is having a catastrophic effect on activity, so he [the Chancellor] must look at revising the levies to more manageable levies for ordinary purchasers, investors and those operating at the top end of the market.” 

“Going into a crucial year where Brexit is concerned something has to be done to make the country more attractive to outside investment and property is one of our best chances of achieving that,” he added.  

Property experts reveal their Autumn Budget wishlist

Ultimately the housing market needs a serious energy boost from somewhere and the Chancellor has the opportunity to do just that next week by specifically addressing the issue of what

Alex Gosling, CEO, HouseSimple.com, describes as “a broken stamp duty system”. 
Additional homes

While it is likely that Hammond will mainly focus on helping first-time buyers, Gosling considers the 3% second home stamp duty surcharge as “more damaging” to the housing market and is calling for the government to reverse the trend. 

“The extra 3% surcharge on second homes has been more damaging to the property market than the lack of first-time buyers, decimating the entire buy-to-let sector,” he added.

“Removing the additional 3% tax charge would immediately inject life into a market which feels like it’s already closed down for Christmas.” 

Vivienne Harris (below) at Heathgate also argues that the Chancellor should reduce the taxation that landlords are charged. 

Property experts reveal their Autumn Budget wishlist

She explained: “Currently rental housing stock is drying up due to the onerous new rules [such as the phasing out of mortgage interest relief] currently being imposed on private investors, especially those who have mortgages. 

“If you create an income deficit for people who already own or buy rental property they will either sell what they own and/or not buy anything else. It’s simple economics. Less stock equates to higher sale and rental prices.” 

Pensioners 

Hammond is also under pressure to cut stamp duty to encourage more pensioners in large homes to downsize and free them up for younger families.

A report by the London School of Economics and the VATT Institute for Economic Research in August found that the rate of home moving would increase by 27% if stamp duty were scrapped altogether. 

“I think we should be incentivising the older generation to downsize, and removing stamp duty for the older buyer is a great way of doing this,” said Adam Day, head of operations at easyProperty. 

He added: “The cost of stamp duty provides another reason not to downsize, with another key reason being the lack of suitable housing. Simply put, we need more houses. We need to fuel the supply, not fuel the demand. The government seem intent on continuing to fuel the demand whilst not addressing the fundamental problem which is a lack of supply.” 

According to a new report carried out by the Centre for Economics and Business Research (Cebr), commissioned by Santander Mortgages, an additional 146,000 sales would have taken place over the past five years if stamp duty had been removed.

In fact, fresh research from Aldermore, the specialist bank, shows that a temporary stamp duty cut would encourage 22% of homebuyers who bought less than three years ago to move again. 

Scrap stamp duty 

Nick Wooldridge of Stacks Property Search would like to see the introduction of a sales tax to replace SDLT. 

He proposes, “A basic charge linked to the location, type and size of property, and an uplift related to the increase in value of the property since the last sale, after a zero-rate allowance for incentivising routine maintenance. This tax is to be paid by the vendor. 

“As most people aim to move up the housing ladder, it seems iniquitous that the buyer effectively pays tax on the increase in value that the vendor enjoys.” 

While it is clear that the industry would welcome any plans, temporary or otherwise, to reduce stamp duty, there are other areas that need to be addressed in order to tackle what some see as an overly complex and costly home-buying system.

Home-buying process 

Property experts reveal their Autumn Budget wishlist

Some 79% of estate agents think the house-buying system is out of date, and would like to see it reformed, according to a recent survey by the NAEA Propertymark, and so it will come as no surprise that the government’s commitment to consult on reforming the home-buying process has been welcomed by agents. 

“Our findings show that estate agents agree and would welcome changes to ensure that the process for buying and selling is brought into the 21st century,” said Mark Hayward (above), chief executive of NAEA Propertymark. “The current prolonged process means that sales are stagnating despite the fact that the supply of housing is up and there is growing demand.” 

If mobility is an issue, then clearly the chancellor must look to address it, according to Nick Neil at EweMove, and that should include addressing what he described as “punitive stamp duty costs” and the “incredibly frustrating and inefficient conveyancing process”.  

“Zero SDLT [on a person’s main residence] and a more efficient conveyancing process are key,” he said. “With more stock changing hands and more security of sales completing, estate agents would also be able to price more competitively than they are able to currently, further reducing the cost burden of moving.” 

Stephen Ward, director of strategy for the Council for Licensed Conveyancers (CLC), describes the existing home-buying process as “one of the most archaic legal transactions” in this country, and one that the Chancellor must address. 

He commented: “An Englishman’s home may be his castle, but purchasing that castle, family home or two- bed flat is an archaic process that needs to be updated. 

“The conveyancing market has never been in more need of attention and Wednesday’s Autumn Budget presents Philip Hammond with a real opportunity to let the genie out of the lamp and demonstrate a real commitment to innovation in the property transfer process.” 

Help to Buy 

Various experts have cited the benefits of the government's ‘Help to Buy’ incentives mainly aimed at first-time buyers, which mainly encourage the purchase of new-builds. 

Since the scheme launched in the second half of 2013, up to the end of June 2017, 134,558 properties had been acquired, according to the Department of Communities and Local Government. But Terry Holmes, director, Beresfords, is now concerned that “there’s been lobbying for Philip Hammond to drop the scheme”. 

“We really hope the Chancellor will continue with the Help to Buy scheme as it’s been a tremendous help to a lot of home purchasers,” he said. 

Property experts reveal their Autumn Budget wishlist

This is a view shared by Rosemary Bell, director at BMA Property Group. 

“We hope to see homeownership become more accessible to first time buyers, through the ongoing support and promotion of schemes such as Help to Buy and Shared Ownership,” she said. “Restrictive measures that will put home ownership outside the reach of young buyers would be a step backwards.” 

Bell believes that the housing landscape can be improved in other ways too. 

“It is time that we saw more done to improve planning regime, free up land for development and fix the dire shortage of skilled labour in the industry,” she added. 

Planning system 

The Chancellor is being urged to beef up the planning system in the Budget and a commitment to fully implement the housing white paper that was set out in February. 

Stephen Stone, chief executive of Crest, is among those who have bemoaned the delay turning a general ‘outline’ planning permission into a detailed one that enables housebuilders to get started on site.

“I don't think it is fully understood [by the government],” he said. 

Property experts reveal their Autumn Budget wishlist

Give landlords a break  

A raft of ‘anti-landlord’ policies introduced by the government have prompting concern that buy-to-let landlords with low profit margins could end up making a loss as a result of various tax changes, which will push some out of the market altogether.

The introduction of the 3% stamp duty surcharge, the scrapping of the 10% ‘wear and tear’ tax relief, and the fact that mortgage tax relief is currently being phased out, means that landlords simply need a break – a tax break, that is, according to Paul Shamplina, founder, Landlord Action. 

He explained: “Many of the anti-landlord policies introduced over the last two years are now starting to impact private landlords, leaving many to consider selling up or increasing rents, both of which will be detrimental to tenants. The market needs to increase not decrease the supply of housing and the only way to do that is to offer incentives to landlords.

“Tax breaks for landlords who offer longer-term tenancies would be welcomed.  However, landlords will also need greater assurances that if their tenant breaks the terms of their agreement, landlords can evict them more efficiently than the present system allows.” 

Property experts reveal their Autumn Budget wishlist

But Sarah Bush, director, Cheffins is concerned that the Chancellor may be planning to introduce further caps on second homeownership.

“After having been in the spotlight for many months now, the letting industry could also come under fire,” she said.

Communities Secretary Sajid Javid suggested at the Conservative Party Conference in September that the Chancellor might launch incentives for landlords to offer 12 month tenancies, along with a new housing court, making letting contracts fairer for both parties. 

“Whilst these would be helpful in principle, landlords are being weighed down by new taxation and costs and the government needs to consider breaks and incentives to keep private landlords in the marketplace,” Bush added. 

But instead of offer landlords a tax break, speculation is growing that the Chancellor will actually take measure to stop buy-to-let investors purchasing property via companies. 

One way round the mortgage interest relief loss has been to set up as a company. Mortgage interest can be offset against tax where the borrower is a corporate structure, and the number of landlords incorporating has rocketed.

Although the rules would be difficult to draw up and apply, it is possible that Hammond could extend the loss of tax relief on mortgage interest to incorporated buy-to-let investors. This would naturally have wider consequences for tenants and the housing market.

Ban on letting agents’ fees

One final issue worthy of a mention is the plan to ban letting agent fees in England.

The proposed fees ban was initially announced last November during the Chancellor’s Autumn Statement, in what is clearly a move designed to shift the cost of all letting agent fees on to landlords, and yet the details remain unclear,

Property experts reveal their Autumn Budget wishlist

“While we’ve been given broad outline information about the tenant fees ban and mandatory client money protection, it would be interesting to see how much of that makes it into the budget, and what time scales are given for implementation,” said Neil Cobbold (left), chief operating office of PayProp UK, a rental payment automation platform

“As always, the devil will be in the detail,” he concluded.  

Contacts: 

Andrews Property Group 

Martyn Gerrard 

The Collection LLP 

HouseSimple.com 

Heathgate 

easyProperty 

Stacks Property Search & Acquisition 

NAEA Propertymark 

Council for Licensed Conveyancers 

Beresfords 

BMA Property Group 

Crest 

Landlord Action 

Cheffins 

PayProp UK

*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor. You can follow him on Twitter @propertyjourno

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