While Rachel Reeves’ autumn statement stressed it was going to support vulnerable people and working people, the reaction of the property industry suggests that people struggling with renting and trying to get onto the property ladder are going to find life particularly difficult.
Here are some thoughts from the industry.
“Hiking stamp duty on homes to rent when 21 people are chasing every rental property makes no sense,” says Ben Beadle, Chief Executive of the National Residential Landlords Association.
“Analysis by Capital Economics has found that increasing Stamp Duty on rental properties from three to five per cent will see a net loss of half a million homes to rent over 10 years. This will not help the huge number of tenants for whom homeownership is still a distant dream.
“The Chancellor has failed to heed the warnings of the Institute for Fiscal Studies that higher taxes on the rental market lead only to rents going up.
“What tenants needed was a Budget to boost the supply of new, high-quality rental housing. What we got is a recipe for less choice and higher rents.”
This will push rents even higher
“Landlords are already leaving the sector in droves, and a further increase in the Stamp Duty surcharge will be yet another deterrent for anyone thinking of investing in property,” say Rob Houghton, CEO of reallymoving, the comparison site for home movers.
“People rent for a multitude of reasons and a strong and affordable private rental sector is absolutely crucial to the health of our housing market. It worries me that these rental homes will not be replaced, creating more competition among tenants and pushing rents even higher.
“For homebuyers, it’s very disappointing to see no reference to the upcoming increase in Stamp Duty from next April. Our research shows the proportion of First Time Buyers paying Stamp Duty will more than double, from 17% currently to 39%, when the temporary higher thresholds are reversed.
The last thing First Time Buyers and upsizers need coming down the road is yet another significant upfront cost, when they’re already grappling with extortionate house prices and higher mortgage rates. Reverting back to the old Stamp Duty thresholds seems completely non-sensical at a time when it’s harder than ever to get on the housing ladder.”
Chancellor Rachel Reeves said the Scottish Government must use additional cash ‘to address the priorities of the Scottish people’. (Lucy North/PA)
The typical first-time buyer will be over £3,500 worse off come 1st April
“Increasing stamp duty on additional home purchases by 2% means that, based on the average asking price for a home (£371,958), a landlord could face an additional charge of more than £7,000 from tomorrow when buying a property,” says Tim Bannister, Rightmove’s property expert,
“In the short-term, some landlords may need to pause for thought, but in the longer-term it becomes yet another charge that landlords wanting to invest in buy-to-let will have to become accustomed to and factor into their decision making. Overall, we need more homes in the rented sector not fewer, but in recent times we have seen record levels of stock leaving the rental market.
“There was no mention of retaining the current residential property thresholds for paying stamp duty, which means we expect that the typical first-time buyer will be over £3,500 worse off come 1st April based on current prices. After paying fees, carrying out any surveys, and stretching their budget with high mortgage rates, this will be an unwelcome additional charge next Spring.”
This will make it hard for those claiming benefits
“Rachel Reeves’ announcement that there will no longer be first-time buyer relief on properties priced up to £625,000 and the total property price must be no more than £500,000 for any first-time buyer savings on stamp duty to apply will hurt those living in more expensive areas of England such as London and the Southeast,” says Trevor Kearney, founder of The Private Office: Real Estate
“Ultimately, it’s going to make the rungs on the property ladder harder for first time buyers to reach, let alone climb. While the Government need to raise money, this shouldn’t be the area to try and do it through.
“Announcements of measures to boost social housing are welcomed with open arms, however this will be a government focus that will require more and more funding, and consistent review against targets.
In fact, a policy decision like implementing stamp duty for sellers rather than buyers would not only incentivise people to buy but help many first-time buyers onto the property ladder, at a time when rental prices have reached record highs.”
It falls short of the affordable housing sector’s needs
“The UK’s affordable housing crisis is a national emergency that demands urgent action,” says Patrick Franco, Chief Executive London not-for-profit housing association, Notting Hill Genesis, “We welcome the Chancellor’s £500m investment in the Affordable Homes Programme and the initial investment of £3.4bn in the Warm Homes Plan over the next three years. However, the Affordable Homes Programme funding falls short of meeting the sector’s needs. Not-for-profit housing associations, responsible for 25% of new UK homes, face constraints that the government could easily resolve by unlocking unused grant funds.
“Previous rent settlements have not been honoured, resulting in the sector missing out on £40-£50bn that could have been invested in building new, truly affordable homes. The consultation on a 5-year rent settlement with an increase of CPI +1% is a step in the right direction but it is the bare minimum that the sector needs. We welcome the Government’s consultation on further potential measures and will strongly advocate for at least a 10-year settlement, which will provide the long-term stability and confidence required to support the Government’s target of delivering 1.5 million homes.
“The government’s £1bn investment in remediation programmes to remove dangerous cladding is another important step for social housing providers, however it remains disappointing that social landlords lack equal access to the Building Safety Fund. Housing associations are dedicated to offering high-quality, safe homes but the level of investment required is too high for social landlords to shoulder alone. Similarly, we had hoped that the Government would address the Section 106 scheme. The Government must address the need for housing associations to be actively involved in the design stage and introduce viability subsidies that could lower acquisition costs or assist tenants with higher rents.
“The government’s pledge to construct 1.5 million homes over the next five years is a potentially transformative step towards addressing the housing crisis. While today’s Budget marks progress towards this goal, further urgent action is needed if this target is to be met. Housing associations like Notting Hill Genesis are eager to play a key role in solving this issue, but our ability to do so hinges on stronger support and investment from the Government.”
The Government hasn’t considered existing, underutilised stock
“The Budget announcement signifies a missed opportunity to address the housing needs of our growing ageing population,” says Auriens Group CEO Julia Fawcett, CEO of Auriens Group, a later living devloper which specialises in homes for the over 65s, “The Chancellor has overlooked the positive impact that stamp duty reform for downsizers would have across the market, freeing up the millions of older people forced to stay in family homes that are far too large, unmanageable and that don’t meet their needs.”
Whilst the government has acknowledged the need for more housing in its boost of the Affordable Homes Programme by £500million, it hasn’t considered existing, underutilised stock. SDLT reforms for downsizers would drive mobility down the chain and most importantly, would allow older people to move to suitable homes including Integrated Retirement Communities, where they can truly thrive in the later stages of their lives.”