Here, we take a look at what this earlier-than-usual Budget had to say about housing, and whether Chancellor Philip Hammond had any surprises up his sleeve for the property industry…
Stamp duty relief extended
After last year’s announcement that stamp duty would be abolished for nearly all first-time buyers, this year Hammond said the government would extend the stamp duty relief for first-time buyers to acquisitions of shared ownership homes worth up to £500,000. As a result, qualifying buyers will pay no stamp duty on the first £300,000 paid on the purchase of their property and 5% on the remainder up to the cap of £500,000.
The measure will also be backdated, so any first-time buyer who has made a purchase since the Budget in November 2017 will be able to claim a refund.
The latest move to support first-time buyers wasn’t welcomed by industry experts, though. Mark Hayward, chief executive of trade body NAEA Propertymark, said the news that the stamp duty relief was being extended retrospectively to include first-time buyers in shared ownership properties was unlikely to ‘have any material impact’.
“Our data shows that so far in 2018, 26% of property transactions involved FTBs,” he said. “This was the same figure as that for the whole of 2017, showing that it hasn’t had a real impact so far, and therefore is unlikely to make a real difference moving forwards.”
Others, however, were more positive. David Westgate, Group Chief Executive at Andrews Property Group, welcomed the extension of the stamp duty holiday to shared ownership buyers. “Punitive stamp duty charges have exacerbated an already sluggish market and any move that will lessen the impact felt by purchasers is good news.”
He added, however, that the changes don’t go far enough and called again for ‘a complete and thorough review of stamp duty’.
“Such a review would result in radical change and whilst that might mean lower individual receipts in to the Exchequer, the impact it would have on overall volumes would at least cancel that out,” he said.
What else was announced?
While the stamp duty extension generated the biggest headlines, there were other measures announced. This included a further £500 million for the Housing Infrastructure Fund
, to aid the construction of 650,000 new homes.
Hammond also said he will make it simpler for neighbourhoods to allocate or permission land for housing, as well as announcing a consultation on the right to extend upwards above commercial and residential properties.
Following on from the announcement at the recent Conservative Party conference
in Birmingham, the Chancellor said that a consultation will be published in January 2019 on the possible implementation of a further 1% stamp duty surcharge on foreign investors buying homes in the UK.
In addition, it was revealed that the Help to Buy scheme will be extended until 2023 but only restricted to first-time buyers, while the government will reform capital gains tax (CGT) lettings relief from 2020 so that it only applies where the owner is in shared occupancy with the tenant.
The rumoured clampdown on short-term lets, to prevent people from ‘gaming’ the system and using Airbnb and other short-let websites to benefit from the Rent-a-Room scheme, didn’t come to pass, while there was very little further information on the plans to lift the borrowing cap on local councils to help boost housebuilding. Hammond confirmed the measure, which formed such a key part of Theresa May’s conference speech, but very few further details were offered.
Landlords get away scot-free
After a string of announcements in recent Budgets that seemed to be deliberately targeted at landlords and the buy-to-let sector in particular, those operating in the lettings arena could largely breathe a sigh of relief this time around.
There were no new taxes for landlords, and no announcement of new regulation or legislation affecting the lettings market, unless you happen to be a non-UK resident investing in British property.
At the same time, there may be frustration that there was no update on the pending ban on letting agent fees charged to tenants, with letting agents, landlords and tenants still left in the dark over when this ban will actually come into play.
What’s more, many in the industry still feel the recent measures introduced by the government – including the phasing out of mortgage interest tax relief and the extra 3% surcharge on second homes – should be reversed because of the detrimental impact it’s having on the market. James Davis, founder and CEO of online lettings agency Upad, said ‘it would be nice if government viewed landlords with more respect and recognised that for many, working within the PRS is a business choice which should, therefore, command the same respect as more mainstream business areas’, while Russell Gould, CEO at Vesta Property, expressed disappointed that once again property had taken a back seat and ‘the much-needed tax breaks to support landlords who provide the nation’s tenants with valuable rental homes have been ignored’.
A low-key Budget for housing
Overall, we didn’t learn much new from a housing point of view and the industry was rather downbeat about what was seen as a lacklustre Budget for property. There were no real major announcements on housing, with no expansion on the plans for three-year tenancies as standard, the possibility of incentives for landlords to sell their properties to long-term tenants or information about the timetable for the introduction of the letting agent fees ban.
The lack of detail about the Tenant Fees Bill, which has reached the Committee stage in the House of Lords, is a particular worry for many in the industry.
“The ban on upfront fees charged to tenants was first proposed by Chancellor Philip Hammond almost two years ago, along with a cap on security and holding deposits,” Neil Cobbold, Chief Operating Officer of PropTech firm PayProp, said. “Given the length of time that has passed, it’s crucial that letting agents, landlords and tenants get more information about when and how it will be implemented.”
While first-time buyers of shared ownership properties will be pleased with the outcome of the early Budget, there was little else to shout about from a housing perspective.