December 4, 2017
London market update: Housing takes centre stage at Autumn Budget
One event and one event alone has dominated November’s housing news. We are, of course, referring to the Budget. Here, we carry out a quick debrief of what was announced in Philip Hammond’s speech, as well as analysing what else has been going on in the world of property.
Stamp duty cut and 300,000 new homes a year
In only his second Budget since becoming Chancellor, Hammond announced a range of measures to help the government fix the ‘broken housing market’.
As part of concerted efforts to help more young people get a foothold on the property ladder, Hammond said stamp duty for first-time buyers purchasing homes worth up to £300,000 will be abolished immediately. Buyers in London or other more expensive areas will pay no stamp duty on the first £300,000 of the cost of homes costing up to £500,000, with the remaining £200,000 incurring a 5% charge.
The government insists 95% of all first-time buyers will benefit, while 80% will pay no stamp duty whatsoever.
As expected, Hammond also outlined ambitious plans for the government to build 300,000 homes a year by the mid-2020s, with £44 billion of government support – in the form of capital funding, loans and guarantees – to make this a reality.
The current government target is 250,000 new homes a year, but recent figures showed this target is not currently being met – only around 218,000 new properties were constructed in 2016/17. Not since the early 1970s have 300,000 new homes been built a year.
100% council tax premium and an end to land banking
In a further effort to improve the chances of those struggling to buy a home, the government said it will give local councils the powers to levy a 100% council tax premium on empty properties to ensure perfectly good homes aren’t left unoccupied. Equally, councils in high-demand areas will be encouraged to set aside more homes for local first-time buyers and affordable renting.
Hammond also announced plans to halt land banking, warning developers that the government would compulsory purchase land banked for financial reasons alone. Currently, there is a considerable gap between the number of permissions granted and the number of home actually built, with the government calling for an urgent review into why this is the case. To give some idea of the scale of the issue, there are currently 270,000 residential planning permissions unbuilt in London alone.
Elsewhere, £1.1 billion will be provided to help unlock strategic sites for development, £400 million will go towards estates regeneration and £28 million will be set aside for Kensington and Chelsea council to deal with the ongoing impact of the Grenfell Tower fire tragedy.
As well as all this, it was also revealed that the government has proposed another consultation, this time on longer tenancies in the private rented sector.
No further info on Help to Buy
At the Conservative Party conference in October plans were outlined to build a new generation of council homes and to inject £10 billion into the Help to Buy scheme to help 135,000 first-time buyers.
In the Budget, though, there was no mention of either of these things. Neither was there any embellishment on the government’s plans to regulate the private rented sector, including compulsory landlord membership of a redress scheme.
96 days to sell a home
It’s not all been about the Budget in November – there was also research which revealed that the average UK property takes 96 days to sell. The survey, carried out by Post Office Money and the Centre for Economics and Business Research (Cebr), analysed the average time a home stays on the market in over 20 major UK cities.
The research found that house prices in all of the cities it analysed – which included London, Glasgow, Edinburgh, Liverpool and Belfast – had increased by an average of 5% over the last 12 months.
First-time buyers overestimating costs
Recent research from high-street lender NatWest has revealed that two-thirds of those buying a home for the first time overestimate how much it will cost. The survey, which spoke to 2,025 UK residents aged between 20 and 45, found that first-time buyers are massively overvaluing certain costs, including stamp duty, valuation fees and mortgage arrangement fees, not to mention conveyancing, survey and indemnity fees.
Although it will no longer be a problem for them, first-time buyers previously judged stamp duty to cost £3,000 on average rather than NatWest’s estimated figure of £1,840, while a mortgage arrangement fee is likely to be £995 on average but first-time buyers believed it to be £1,815.
For more help and advice on buying or selling a home in London, please get in touch with Atkinson McLeod.
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