How much difference do you think the Autumn Budget will make to the housing market?
In practice, of course, it’s too soon to tell. Nevertheless, I think it’s fair to say that opinion – at least, within the industry – is fairly evenly divided.
Naturally, all the headlines have been about the scrapping of Stamp Duty on the first £300,000 for first time buyers purchasing property costing up to £500,000. This equates to a saving of as much as £5,000, and effectively means that 80% of all first time buyers in England (outside London) are now exempt from Stamp Duty altogether - compared to just 21% before the change came into force.
This change will undoubtedly be of help to some hard-pressed young people looking to get onto the first rung of the property ladder, by reducing the costs involved in their purchase and arguably making it a little easier to save the necessary deposit – particularly under the Help to Buy scheme, where they only have to find a 5% deposit in the first place.
On the other hand… there are those who argue that helping first time buyers in this way will only lead to an increase in demand – thereby fuelling further price rises. And there could also be a knock-on effect on the private rental sector, where investors – already reeling from last year’s tax changes – will now find themselves at a further disadvantage when in competition with first time buyers.
Could the Chancellor have done more? Of course he could. He could, for example, have announced a far more ambitious re-structuring of the entire Stamp Duty regime - something that practically everyone involved in the property industry has been urging the Government to do for years. So, he could have transferred the burden to the vendor – who, having just sold, is likely to be far better able to afford the Stamp Duty bill than the poor buyer who has already shelled out hundreds of thousands of pounds! Or, he could simply have scrapped Stamp Duty up to £300,000 for everyone, rather than just for first time buyers.
Ultimately, the only real long-term solution to the housing problem is to greatly increase the number of new homes being built. Here, the Chancellor did take some small steps to stimulate the supply side – for instance, by simplifying the planning laws, etc. But nothing truly earth-shattering.
All in all then, I suppose the verdict has to be – “A good solid effort, but could have done better!”