Industry reacts to George Osborne’s Eighth budget.
Chancellor George Osborne’s 2016/17 announced downwardly revised growth figures for the UK economy as well as announcing he had missed his targets for deficit reduction as a proportion of GDP.
The Chancellor also announced a raft of measures aimed at helping small businesses, safeguarding homes hit by the winter’s floods from more damage and detail and further reforms on SDLT including extending the buy-before-sale refund window to three years.
Eddie Goldsmith, Chairman of The Conveyancing Association said: “In terms of the summary of responses to the consultation on the increase in stamp duty land tax for the purchase of additional properties, we welcome some of the clarity provided today. The doubling of the time individuals have to dispose of their main residence, and the time they have to claim a refund, up from 18 to 36 months is welcome, as the selling time frame can be long for many vendors. The decision to not treat married couples, who are living separately, as one unit is also a positive step – we believe this would have stopped individuals who are living apart from purchasing a main residence just because they are on the deeds of their former home.
“There is also a positive statement being made here about the responsibility purchasers have for ensuring their SDLT return is correct, and the onus is not being put on the conveyancing profession to play policeman when it comes to who is responsible for ensuring the return is right. That said, the conveyancing profession now has less than three weeks to prepare itself for these changes – a time period which is completely inadequate given the increased level of transactions this policy has caused, and the fact we are already dealing with the traditionally busy Easter period. One wishes that the Government could have considered the work required by conveyancers in order to put the correct systems and processes in place.
“Overall, we are also slightly disappointed that the measures have not been watered down as we believe they will have a significant impact on the smaller landlord in particular who may now leave the private rental sector resulting in a widening of the housing gap. The exemption that was to be supplied to larger investors – previously set at those who owned 15 properties or more – seemed completely arbitrary and, in the pursuit of fairness, it seems completely appropriate that this has been scrapped. The true result of these measures, and their impact on overall housing market activity, remains to be seen but we suspect there will certainly be a tailing-off in buy-to-let purchases for some time to come.”
The Help to Buy ISA, announced in November, is now set to be scrapped by 2019 and replaced with a “Lifetime” ISA that also pays a 25% bonus on withdrawal and can either be used for house purchase or to fund retirement.
Mark Hayward, managing director, National Association of Estate Agents, said: “The Chancellor’s announcement that a new lifetime ISA could be used to help people buy their first home is welcome news. Helping first-time-buyers (FTBs) to get on the housing ladder should be a priority for the government, limiting this to those aged 40 or under emphasises the real issues for those trying to get on the housing ladder. Our recent Housing 2025 report forecast that house prices will soar by 50% by 2025, meaning that the task of helping FTBs to get on the first wrung of the housing ladder is only set to get more difficult for many people across the UK.”
Richard Sexton, director of e.surv chartered surveyors, said: “First-time buyers may be feeling disappointed by today’s lacklustre budget announcement, which failed to address the lack of housing supply, again skirting over any substantial changes to planning reforms. The same problems will remain – not enough properties are coming onto market, not enough new homes being built – and its first-timers who are seeing future dreams of a home drifting further out of reach.
“Although the Help to Buy ISA has proven popular, many are finding it increasingly difficult to save. The new lifetime ISA has the potential to increase savings ability – but the average deposit in January stood at £28,393. By this measure it would take an individual first-timer 6 years in order to save this amount. On the Help to Save Scheme it would take 32 years. And across these time frames, house prices will keep on climbing across the country. Time is not a luxury that first-timers wanting to move to start a family or settle into a new home may have.
“The North East boasts the lowest average house price in England of £108,395. As the Northern Powerhouse momentum continues however, boosted by HS2 and the newly announced HS3 this first-time buyer haven could also become an unreachable location for many. The government needs to do more to tackle house prices – the next generation of homeowners are being overlooked.”
Jonathan Stephens, Managing Director of Buy to Let property consultants Surrenden Invest, said: “Today’s announcements by the Chancellor will have come as no real surprise to those looking to buy an investment property in coming months. George Osborne has maintained his earlier pledge on Stamp Duty, holding strong on the changes already announced, which in turn means that those investors with their fingers on the pulse will not have experienced any kind of real shock to the system today.
“What it does mean, however, is that we are set to see an ever-increasing focus on the ‘Northern Powerhouse’ as the location of choice for investment properties. This Government focus on the North-West was highlighted further still today with the announcement of new road improvements in the region, along with a new tunnel linking Sheffield with Manchester. Giving the green light to the HS3 Manchester to Leeds line will also massively grow investment prospects in the Northern Powerhouse, improving transport links and high-speed travel. “I said we would build the Northern Powerhouse. We are making it a reality and rebalancing our country,” Osborne said and this can only be a good thing for those buying into the region.
Brian Berry from the Federation of Master Builders called it a missed opportunity: “The Government has set itself a target of a million new homes by 2020. That is rightly ambitious, but the continuing gap between what’s being built and what needs to be built makes hitting that target more difficult by the day. Official statistics show that annual housing completions in England totalled just over 140,000 in 2015, a long way short of the 200,000 homes we need every year to hit one million.
“We are nearly 12 months into the current Parliament and the Government is already falling well behind on its targets. We recognise that the Government is working on a number of fronts to speed up the planning process and intervene to support first time buyers, and some of the measures in today’s Budget are welcome steps forward. Yet these announcements are limited in scope and won’t signal the step change that we need to see. We cannot afford to lose momentum in the battle to beat the housing crisis.”