As the annual Autumn Budget statement approaches, online estate agent eMoov.co.uk has reached out to the Chancellor, urging him to build more homes and shake up Stamp Duty in next week’s announcement.
On Wednesday 22nd November 2017, Chancellor Philip Hammond will deliver the Autumn Budget, outlining possible plans for the UK housing market.
Judging by past Budgets, it is expected that this upcoming announcement will have little impact on the property sector. The Government has already pledged to ban letting agent fees, which, in their eyes, is likely to go some way in tackling the nation’s housing crisis.
eMoov believes that it’s unlikely that we will see any further attacks on the buy-to-let sector, which has already suffered several blows in previous Budgets and since. However, the firm claims that we may seem some “paltry attempt” to bring first time buyers on side through “further regurgitated rhetoric”, with the intention of making getting on the property ladder slightly less impossible.
Nevertheless, the agent predicts that the property market will be largely overlooked this year, “with a hope that it will remain in the shadows of other headline-grabbing initiatives”.
Although eMoov says that it is wishful thinking, there are a number of issues that it wants to see addressed by the Government, in order to make a meaningful start on solving the housing crisis.
One of those is Stamp Duty, which has proven to be a constant burden on homebuyers that will only persist if not confronted by the Government. Rather than lower Stamp Duty for older homeowners who have benefitted from sky-high house price growth over the last few decades, eMoov insists that the tax should be reduced for first time buyers, to give them an additional helping hand onto the property ladder – sort of a reverse of the additional Stamp Duty rate for second home buyers and buy-to-let landlords.
The agent also hopes that Stamp Duty is flipped on its head, so that it becomes the seller’s financial obligation, rather than an obstacle to those trying to get onto the ladder. Either that or have it eradicated altogether, it adds.
Russell Quirk, the Founder and CEO of eMoov, says: “In a market where the financial hurdle is the main obstacle for first time buyers, the Government should put an end to this archaic land tax. It is already difficult enough to come up with the money to buy a property, and Stamp Duty only increases the hardship placed on first time buyers to get out of the rental graveyard and onto the ladder.”
Next, eMoov cries out for something meaningful where the actual building of new homes is concerned. While homeowners will enjoy positive price growth, this simulated inflation – due to an imbalance in buyer demand and housing stock available – is not a healthy basis for the market to be growing, and, as previously seen, this can end very badly, the agent notes.
One if its greatest demands is that both local and national governments reveal all of the spare land that they own, in order to either sell or develop it, because “there is a lot of it”. Instead of using £1 billion corporations to develop the land, eMoov insists that governments should use their own developers, who would oversee the construction of properties, allowing for thousands of homes to be built.
It claims that it’s vital that this entire process is taken out of the hands of politicians and instead overseen by experts in the sector. In addition, the planning involved and further development of this land must “lose its democratic edge and NYMBY influence to be successful”.
However, the agent highlights that it appears that the Government wants to restrict the supply of housing, in order to artificially stimulate this price growth and keep the homeowning masses on side, while aspirational buyers continue to see homeownership slip further out of reach.
Given its track record, eMoov believes that it is very unlikely that the Government will provide any sufficient level of stock that would see prices level out, but it hopes that it makes some attempt.
The agent states that the Government could solve the housing crisis by allocating 1% of the UK’s less desirable greenbelt areas every ten years, which would result in the construction of 600,000 new homes.
Quirk concludes: “We’ve previously called for tax incentives to developers so they actually build rather than land bank, and the wrongly classified areas of greenbelt land could also go a long way in addressing the shortage of property, if only local councillors weren’t so easily intimidated by the selfish cries of NIMBYs, who don’t want to see outsiders moved to their green and pleasant lands.”
Our buy-to-let expert Rose Jinks has offered her opinions on the upcoming Budget statement here – read what she has to say: http://bit.ly/2yKpxrd
The Managing Director of housebuilder Bellis Homes, Henry Fordham, has similar hopes for the Budget announcement: “We hope that the Chancellor will eliminate Stamp Duty for first time buyers. Such a policy would support market entry and aid transactions which are being suffocated at present, with the number of home purchases blocked by Stamp Duty doubling over the last five years.
“A reduction would catalyse market activity and prompt transactions from both down and upsizers, which are currently inactive due to the implications of Stamp Duty. An increase in residential transactions would benefit and balance the economy tremendously as a whole.”
He adds: “That said, we do hope that Hammond does not try to balance this cut for first time buyers by increasing Stamp Duty on prime housing assets. Such an increase would further restrict those up the ladder wishing to move – a significant proportion of the UK housing market and one which supports the livelihoods of thousands within the industry.”
However, John Goodall, the CEO and Co-Founder of buy-to-let specialist Landbay, has different thoughts: “In the midst of rumours about Stamp Duty and transformative housing policy, my focus is on whether the Budget will introduce further tax changes for landlords. Realistically, whatever fix is offered to the UK’s housing market, the private rented sector will have an important role to play. It’s vital that the sector remains attractive to landlords, and complex costs and taxes will disincentivise landlords from engaging in the market.
“A fall in quality and volume of rental accommodation would hit those that the Budget is trying to help hardest. Renters and potential first time buyers would take the brunt of the costs, actively working against any goals of intergenerational fairness that Hammond claims to have. More widely, this would damage the UK housing and construction markets at a time where the UK economy can’t really afford the hit.“