Economy brightens Budget gloom for property professionals

Following the disappointment of his Autmn statement, many property professionals were hoping for a kick-start to property sales in Jeremy Hunt’s Spring Budget.

Hopes of a radical re-think on Stamp Duty Land Tax, a new version of Help to Buy or even 99% mortgages for first time buyers, were all dashed in the end as the Chancellor’s financial statement was branded ‘disappointing’.

Steve Richmond, General Manager UK&I at estate agent technology provider, Reapit, said: “This was very much an election budget; however, for the property industry it was mostly a disappointment, offering nothing in the way of support for first-time buyers through either supply or mortgage support.

“While the government claims to be on track to deliver on one million homes over the course of this Parliament, they are still falling short on delivering on their target of 300,000 homes per year and despite the recent dip in house prices, affordability remains a challenge among first-time buyers looking to get on the ladder.”

The major move in this direction was a 2p cut in the employee National Insurance rate from 10p to 8p – meaning an average wage earner will see themselves better off by £450 per year.

Shifting supply

“Overall, while the Budget was a missed opportunity to announce measures to ease strain on the property industry, it was nonetheless not all too surprising that measures were tempered given the lack of fiscal headroom available to the Treasury. The headline 2p cut in National Insurance from 6 April may put a bit more money in peoples’ pockets, but they are unlikely to feel it when those pennies run up against rising costs elsewhere,” said Richmond.

 “The surprise takeaway was the drop in the higher rate of capital gains tax on residential property from 28% to 24%. This may (as the Chancellor claims) result in more transactions, but I’m wary that this simply means shifting supply from an already heated lettings market to the sales side, leading to an increase in rents amidst reduced supply in the sector as disillusioned landlords take advantage of this opportunity to sell-up.

“The market certainly needs an improved planning scheme to promote healthy growth and supply in the housing sector while avoiding an ignition in house prices beyond what people can afford, but doing so would just be kicking the debt can down the road.”

Craig Viles, director of the The ValPal Network (TVPN) acknowledged that some industry commentators might be disappointed by the Chancellor’s lack of direct help for the sector, but added: ““While some had probably hoped for more, the tax cut will be warmly welcomed.

“It will help some first-time buyers overcome lender affordability criteria.

“And with inflation coming down and the prospect of lower interest rates to come, we may well see greater confidence in the market and some of that pent up demand begin to flow through.

“Aside from any specific measures to drive transactions, the outlook for the economy more generally is brighter and that should give us all some optimism as we head into the Spring.”

Entrepreneur Chris Tremlett, co-founder of UK Homes Network, said he was disappointed that the Chancellor had missed the opportunity for SDLT reform.

“This move diverges from the anticipated support for broad-based market stimulation,” he said.

Change is overshadowed