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The Budget was a “missed opportunity” for the property market as the Chancellor failed to announce some long-sought “game changers”, industry experts have said.
Jeremy Hunt made several property-related announcements in the Budget, including 8,000 new homes to be built in Barking Riverside and London’s Canary Wharf.
He also announced a tax offensive on vacation rentals and a cut in the capital gains tax rate for rental homes and second homes, in addition to saying that the relief for multiple homes was for the cut.
However, experts said the measures will do little to help struggling renters facing record rents and crippling supply shortages, or homebuyers, particularly first-time buyers struggling to get up the housing ladder. due to high housing prices and disability. to save a large enough deposit.
Jeremy Hunt made several property-related announcements in the Budget, including the construction of 8,000 new homes in Barking Riverside and London’s Canary Wharf.
Paresh Raja of specialist lender Market Financial Solutions said: “Ultimately, after two years of rising interest rates, this Budget would have been an opportune time to implement a series of policies and reforms to boost the real estate market. “It seems like a missed opportunity.”
And Lucian Cook, of estate agency Savills, added: ‘There was relatively little in the budget for first-time buyers and nothing substantial for housebuilding beyond 8,000 homes in east London.
He said the Chancellor’s reforms to stamp duty and capital gains tax relief may “reduce some competition” from investors for existing housing stock, but added the measures were “not a game changer.” ” for the real estate market.
New houses in East London
Paula Higgins, of the HomeOwners Alliance, described the announcement to build 8,000 new homes in east London as a move that “doesn’t scratch the surface”.
This is despite the Chancellor insisting in his budget speech that the Government is “on track” to deliver more than a million homes in this parliament.
The issue for many buyers remains affordability, as high house prices and mortgage rates remain a major barrier to moving up, or even up, the real estate ladder.
The average price of a property sold in Britain over the past 12 months was £336,469, according to Zoopla.
And the 8,000 new homes are hardly in what would be widely considered “affordable” areas, with the average price of a house sold in Canary Wharf over the past year at £562,224 significantly higher.
The announcement to build 8,000 new homes in east London has been described by a housing expert as a move that “doesn’t scratch the surface” of the housing needed across the country.
Jeremy Raj, of solicitors Irwin Mitchell, said: ‘With housebuilding at a standstill and rents, mortgages and residential properties as unaffordable as ever, it was surprising to note how little the Budget speech related to housing and planning.
‘It is difficult not to conclude that the Government now considers that issues within the residential property market will not be a favorite battleground for them in the next general election, apart from slogans about the green belt and common domains.
‘Several kites were flown in the run-up to the budget, but the reality was a clear lack of innovation or creative thinking in relation to issues such as staff reduction, property taxes or improving the environmental quality of our park. households.
“The abolition of multiple dwelling relief and adjustments to capital gains tax may have raised eyebrows, but hard-working conveyancers will breathe a sigh of relief that the now almost traditional struggle to incorporate a new stamp duty regime across its Current transactions have been largely avoided.
“However, your clients will continue to wonder how to accommodate themselves and their families in an acceptable and affordable way.”
Capital gains tax reduction
The Chancellor announced that the top rate of capital gains tax on the sale of residential property will be reduced from 28 per cent to 24 per cent next month.
Experts noted that while the cut would increase the Chancellor’s income through more transactions, the move could end up hurting tenants.
Faye Church, of Investec Wealth & Investment, said: ‘Capital gains tax arising from residential properties is set at a higher rate than gains from other assets.
“However, the Chancellor claims that reducing this rate would actually increase revenue through more transactions.”
‘We want to act now to increase the supply of much-needed rental properties. It seems that practical measures are missing that will not take years to bear fruit
Isobel Thomson, of Safeagent, the not-for-profit accreditation scheme for letting and management agents, went on to explain: “The Chancellor suggested that reducing the top rate of capital gains tax on property sales from 28 to 24 percent increase Treasury revenue, as it would encourage more transactions.
‘But if more landlords are persuaded to leave the sector, there is a risk this could drive up rents even further, making things even more difficult for struggling tenants.
‘We want to act now to increase the supply of much-needed rental properties. There seems to be a lack of practical measures that will not take years to come to fruition, such as a plan to reuse some of the many empty houses.’
Stamp duty reform
Housing experts said there was also a missed opportunity to reform stamp duty, which can add significant costs to moving expenses.
Tomer Aboody, director of property lender MT Finance, said: ‘PPersuading more landlords to sell by reducing the CGT they pay could be detrimental to the number of rental properties available, leading to higher rents for tenants.
‘While this would further encourage potential buyers to opt for housing rather than renting, some help is needed to make purchasing more affordable.
The obvious answer is some form of stamp duty reform, allowing buyers to make larger deposits, and the Government missed an opportunity in this regard.
Downsizing and 99% Mortgages
Pre-Budget speculation about 99 per cent mortgages and stamp duty cuts for downsizers failed to materialize in the Chancellor’s speech.
Nick Sanderson, of retirement property firm Audley Group, said: ‘The focus shouldn’t just be on building more homes for first-time buyers. It’s about building the right types of homes.
‘The Government must examine how the property market as a whole works. Instead of continuing its narrow focus on first-time buyers and young families, it needs to look to increase the supply of age-specific housing.
“This would encourage older homeowners to move out of large family homes, freeing up supply and creating movement up and down the social ladder. The benefits of this are numerous.
“Any new development should include provisions for age-specific housing.”
Tax repression on vacation rentals
The Chancellor announced that tax relief for furnished holiday lets will be removed to help improve the availability of long-term rentals.
The move was widely anticipated as a way to align the short-term rental tax regime with long-term rentals.
However, Ben Edgar Spier, of Sykes Holiday Cottages, said: “Holiday let owners have been unfairly made scapegoats under the guise of controlling rising house prices and availability.
‘Short-term rentals really are the economic lifeline for many parts of the UK, driving spending, providing direct employment and supporting local businesses alike.
‘It is therefore illogical to penalize these short-term rental companies to the detriment of those with empty second homes, which contribute nothing to local economies, when these benefits are considered.
No major changes
Overall, the Chancellor was heavily criticized for failing to make major changes to the property market.
The decision not to address the supply problems that have been holding back home buying in large areas of the country for several years could be a decisive moment for the current Government.
Tim Bannister, of Rightmove, said: “We had hoped the Government would take the opportunity to help first-time buyers and reform the current outdated stamp duty system – instead people moving house are left with very little”.
Meanwhile, Nick Leeming, of estate agents Jackson-Stops, said: “MWe were all rightly hopeful that the Chancellor would present a clear property priority plan today. However, with nothing to lose and a deposition lasting more than an hour, it appears that Hunt has opted for a rabbit-in-the-headlights approach to housing by avoiding major changes to property taxes.
‘For many voters set to go to the polls in a matter of months, the decision not to address the supply problems that have been slowing home ownership in large areas of the country for several years, could be a defining moment for the current Government . ‘
Irwin Mitchell’s Raj concluded: “In his attempts to woo voters ahead of the next election, the Chancellor missed a trick by failing to bring forward more meaningful and positive policies for the housing market.”
