Following today’s autumn budget announcement, a number of the UK’s leading property specialists have commented their opinion below.
Jason North Associate Director and London Property Specialist says…
“If, in a parallel universe, the EU referendum had not come about, this chancellor’s budget would have been welcomed as an uplifting and forward thinking affair. Just for a while there, the shadow created by the lengthy frustrating and protracted negotiations of achieving Brexit was lifted and one was able to believe that we as a country can come together. Property did not pay a large part in the budget but there were further efforts to stimulate the first time buyers market and to open up fresh areas of the country for development. Until Brexit is resolved however, whether hard, soft or otherwise, values will continue to stagnate and decline. That fence which people are sitting on is becoming dangerously overcrowded. This time of opportunity for buyers should be grasped with both hands.”
Russell Gould, CEO, Vesta Property said…
“We are disappointed that once again property has 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. The move to provide Lettings relief limited to properties where the owner is in shared occupancy with the tenant only goes so far. It doesn’t provide any support to the wider landlord community. The private rented sector is fulfilling a vital service in the UK by providing essential rental properties for millions of households unable to find or buy their own property and access local authority housing. What the Chancellor has failed to recognise is that the existing taxation on rental properties hurts everyone in the long run. We have already seen thousands of private landlords leave the sector since April 2016 when stamp duty was increased. Recently, the National Landlords Association stated that approximately 380,000 landlords[i] could flood the market with properties putting tenants’ homes at risk, while causing significant disruption to the lives of longer-term tenants (increased distances from schools, places of work and communities). As a result, prices rise. The Royal Institution of Chartered Surveyors (RICS) believes that rents are likely to rise by 3% annually for the next five years, outstripping rises in house prices. It’s not just stamp duty; landlords have faced increasing pressures from mounting regulation and continued reductions in cash flow due to Section 24 of the Finance Act that removes the landlord’s ability to deduct the legitimate expense of mortgage interest, so many landlords with debt have to pay more income tax. ”
“We expected to see creative solutions from the Chancellor to address the imbalance and incentivise private landlords to stay in the game with creative holistic solutions designed to benefit both landlord and tenant – the needs of both are not mutually exclusive. We applaud moves by third parties and innovative proptech companies who are disrupting the sector for good from within. For example, replacing deposits with rental insurance schemes is an effective idea from the Centre for Policy Studies. Vesta’s online marketplace is designed to keep tenants-in-place when landlords buy and sell properties. Innovative features such as a flat fee – no commission, properties marketed with due diligence completed upfront, and Buy It Now meaning offers are instantly accepted on many properties reducing expenses and time.”
“Creative solutions from the private sector will continue to benefit both landlords and tenants but until the government loosens the noose around the neck of landlords, we will all face an even greater challenge in the coming years.”
Benedict Hall Director of BARNES Commercial Department says…
“From a commercial real estate investment viewpoint nothing dramatic or damaging was announced in this year’s budget, it was certainly targeted at UK families and workers. By comparison last year’s budget introduced the revised taxation on commercial real estate for overseas investors which comes into effect from April 2019, I am sure this was taken into account in this year’s budget and it certainly hasn’t dampened the appetite for commercial investing. The pot of money set aside to help the smaller high street businesses and retailers over the next two years will only help protect them as investment opportunities. What is more important is the £2bn set aside for Brexit which is paramount in ensuring the UK remains a safe haven for transparent and non-volatile commercial real estate investing going forward.”
“Housing is at the core of our economy and is a key factor in the state of our economy in the months leading to Brexit. The introduction of a tax break for home sales to long-term tenants will serve as a much-needed push of confidence for the property market. Giving long-term tenants the opportunity to purchase their property of residence can reverse the homeownership decline and improve rental conditions as one-third of ‘Generation Rent’ may never be able to buy a property.
The Chancellor has gone further with a stamp duty relief for first-time buyers of shared ownership homes of up £500,000 backdated. This was highly anticipated and is a welcomed initiative for potential homebuyers. Furthermore, the stamp duty increase of 1% for homebuyers who do not pay tax in Britain, has the potential to work to the advantage and the disadvantage of the property market. With such high levels of property investment coming from East Asia in regions such as Birmingham, Liverpool and London, this could work to the detriment of the market. Although, Foreign Direct Investment is essential and valued, we cannot let this work to the detriment of potential domestic homebuyers, as they cannot compete. Therefore, the increase in stamp duty for foreign investors will help first-time buyers and second steppers to penetrate the market in a less competitive climate.
The announcement confirmed that the government is lifting the cap on the amount of money local authorities are able to borrow to build housing. Giving the power back to local councils to build social housing in their regions has the potential to provide the infrastructure which the local economies can benefit from.”
Paresh Raja CEO of Market Financial Solutions says…
“At a time when demand for property is outpacing supply, there is limited time left for the Government to improve accessibility to housing. Unlike the Spring Statement earlier this year, some important announcements were made, including the commitment to build an additional 650,000 new homes. Unfortunately, there were no new reforms to creatively increase the amount of private investment into derelict homes that could be renovated and put back on the market. The country boasts some of the world’s most desirable real estate, which is why we should be encouraging both domestic and foreign investment into the property market. It is also questionable whether the Government will be able to deliver on its new-build targets given its past track record.
“It is easy to see why the Government keeps missing new-build targets: Housing Ministers are appointed and replaced at far too great a frequency. Since the Spring Statement we’ve seen a new MP enter the role, but how long will Kit Malthouse last? The Government must ensure there is strong, consistent policy in the property industry because it remains hard to pinpoint their long-term strategy at present.
Theresa May confidently touted that austerity was over at the Conservative Party Conference. This was a bold statement to make and brought with it heightened expectations about the scope of reforms to be introduced by the 2018 Autumn Budget.
“While there were some important announcements to take note of, the Chancellor fell short of delivering the ‘austerity-ending’ budget people were expecting. This shouldn’t come as much of a surprise – the official date of Brexit is now just five months away, and while Number 10 has suggested that the UK’s eventual deal with EU will not affect today’s Budget announcement, one cannot help but be suspect. Ultimately, as expected, there remains a sense that we are going to have to tread water for a little big longer as we await the final Brexit outcome and the Government can then begin making more meaningful, far-reaching reforms.”
Paresh Raja, CEO of Market Financial Solutions