LRG sets out its stall for election 2024

With election day looming, in the first of a series of articles, experts from property services organisation, Leaders Romans Group, offer their take on the major policy issues facing the sector. The first subject under the spotlight is property sales.

Support for first time buyers and Stamp Duty
Jason Farrimond, Director, Land & New Homes:
This is the first time in recent history in which there is no support for housing from the government. Our shared ownership division is doing very well currently, but this demonstrates the fact that far fewer people than previously are able to buy on the open market, and the problem is expanding beyond the southeast.

A drop in Stamp Duty would be helpful, but it would need to be a permanent reduction. As we saw following the pandemic, a Stamp Duty holiday simply causes a bubble and when that bubble bursts, the market returns to the state that it was in previously.  A change to Stamp Duty must be embedded in the system; something that people can calculate into their long-term plans rather than creating a panic-buying scenario. This initiative would also help to get the market moving, enabling others to move up the property ladder.

I’d like to see changes to Stamp Duty that benefit all levels of the property market to stimulate activity and help reduce the financial burden of buying a property. The property market is still extremely price sensitive so any help to offset some of the costs will be a big benefit for home movers, from first time buyers all the way through to downsizers.

It will take a number of years to get the planning system back on track, but if the new government makes housing a high priority, the benefits will soon cascade through the system and ultimately incentives and fiscal changes such as Help to Buy and changes to Stamp Duty won’t be necessary. The most successful markets are those which are fuelled by a positive cycle rather than relying on interventions which can create artificial inflation or ‘bumps’ in the market.

Incentives to encourage downsizing
It has been suggested that incentives to encourage downsizing would benefit the market, allowing retired couples to move away from the family home without seeing their children’s inheritance spent on Stamp Duty.

The role of downsizing could increase substantially in view of the growing older population. But incentives linked to Stamp Duty should be applied evenly across the market: to avoid bumps and to remove Stamp Duty for downsizers across all geographic areas would disproportionately benefit those areas with the most expensive homes, exacerbating geographic irregularities and countering any benefits achieved through levelling up.

An end to uncertainty
I predict a positive impact on the property market following the general election regardless of the outcome. It is inevitable that in the run-up to the election there is uncertainty, and conversations of landslides perpetuate this uncertainty. Politicians committing to lowering house prices is encouraging news for many, but not for the short-to-medium health of the market.

A sustained commitment to the housing market
Kevin Shaw, National Sales Managing Director, Leaders Romans Group:
The last few years have seen too much change impacting on the housing market.  Initiatives such as Stamp Duty holidays have been of temporary benefit but haven’t provided the long-term stability that the market needs. The health of the property market is vital to the success of the UK economy.

This is partly because the ‘multiplier effect’ from a house sale is greater than that of any other purchase: from professional fees to redecoration and the purchase of new furniture as well as the total spend by new home owners. The benefit to the economy is significant.

Interest rates
An interest rate change of as little as 0.25% has a considerable impact on property market sentiment. The next Government’s focus must be on continuing to reduce inflation so that interest rates fall and mortgages with them. While changes to interest rates per se aren’t within the Government’s control, creating the right environment for an interest rate change certainly is.

Stamp Duty
Currently the punitive level of Stamp Duty – particularly on home purchases of over £500k - is holding back mobility in the housing market.

The greatest opportunity that any government has to benefit the property sales market is to make significant changes to Stamp Duty.  By this I do not mean a Stamp Duty holiday which, as we saw in 2020/21, results in a considerable peak, followed by a considerable slump.

An increase in housing targets
Labour has made a commitment to build more houses than the current Government.  The would-be-government has not promised to exceed the current target, but it has promised to meet it – something which has not been achieved so far under this Government. An increase in supply is welcome. Contrary to what some of the pundits have claimed, I do not believe that supply and demand factors will deflate house prices, because demand – largely pent-up over many years – will continue to outstrip supply for many years to come. And ultimately, supply will help free up frozen chains and create more positivity.