November 24, 2016
Chancellor outlines government’s property plans in Autumn Statement
There has been one thing dominating the news agenda in recent days – Philip Hammond’s first Autumn Statement since becoming Chancellor of the Exchequer.
Property, as usual, played a big part in proceedings. Here, we outline what impact the Autumn Statement is set to have on the sales and rental markets and the property market in general.
No change to stamp duty plans
Hammond’s speech saw no mention of stamp duty, or a reversal of the controversial buy-to-let tax reforms introduced by his predecessor, George Osborne. Despite significant opposition and lobbying from the property industry, it would appear that these reforms remain unchanged and that the modifications to mortgage interest tax relief will be phased in, as planned, from April 2017. It also means the additional 3% stamp duty surcharge on second homes will remain in place.
Efforts to increase the number of new homes, meanwhile, played a central part in plans put forward by the Chancellor. As well as the previously announced £3bn Home Builders Fund, Hammond used the Autumn Statement as an opportunity to lay out a raft of funding pledges for new housing.
This includes a relaxation of planning regulations to help developers build a wider selection of new-build homes, a £1.4 billion fund for 40,000 more affordable homes by 2020/21, and a £2.3 billion fund to ‘unlock land’ and provide 100,000 new homes in high-demand areas.
In London, meanwhile, £3.15 billion has been set aside to help build approximately 90,000 new homes, a move fully welcomed by Mayor Sadiq Khan. While this is the highest ever investment secured for housing by City Hall, Khan was keen to reiterate his message to frustrated Londoners that dealing with housing problems was “a marathon, not a sprint”.
Homes offered at below-market rents and more shared ownership schemes will be some of the things the extra cash will be used for.
Sales market update
The fact that the changes to buy-to-let stamp duty and mortgage interest tax relief won’t be abandoned is seen by some as good news for the first-time buyer market, with less competition for starter homes or homes being sold by second-steppers.
While the prime end of the market has been affected by recent stamp duty changes and the fallout from Brexit, elsewhere things have remained pretty resilient – with house prices remaining steady and sellers still confident about achieving a good asking price when they bring their property to the market.
As has been the case for the last few years now, there has also been research that suggests sellers should consider putting their homes on the market before Christmas, to take advantage of the spike in interest from buyers over the festive period.
The number of people visiting property portals such as Rightmove and Zoopla rises considerably from Christmas Day up to New Year’s Day, with browsing for property becoming an increasingly popular way for people to spend their spare time.
Lettings market update
The big news from the Autumn Statement as far as the lettings industry is concerned – and it seems like the world and his wife have said their piece since it was announced –is the banning of lettings fees for tenants in England and Wales.
Applying to roughly 4.3m private renters (in England), the government predicts that each tenant will save around £337 once the ban comes into place. Hammond said he wanted this to happen ‘as soon as possible’, but there is likely to be a consultation period beforehand.
As you might expect, those within the property industry aren’t particularly happy about the news and have already voiced their opposition to the plans. They say the costs will simply be handed onto landlords in the form of higher management costs. In turn, the landlords will pass these extra costs onto tenants in the form of higher rents. So, in effect, they argue that the very people the ban is intending to help will actually be the ones who end up being penalised.
Supporters of the move, however, have pointed to the situation in Scotland, where fees have been banned since 2012 and where there has arguably been no noticeable impact on rents or the availability of homes in the PRS since.
For more help and advice on buying or selling a home in London, please get in touch with Atkinson McLeod. To give you an idea of how much your home could be worth in the current marketplace, we also offer free instant online valuations.