Ahead of today's announcements, the top items on the property sector's budget 'wishlist' included waiving Capital Gains Tax for landlords who sell to first time buyer tenants, tax breaks and incentives for landlords who offer longer-term tenancies and various cuts to stamp duty.
So how did we do?
Well, burried between a few jokes about toilets and the usual rise in tobacco duty... it was announced that from April 2020 the government will limit lettings relief to properties where the owner is in shared occupancy with the tenant. There was the usual headline grabbing announcement about new homes, £5.5bn for the Housing Infrastructure Fund this time - in a move aimed at supporting the building of 650,000 new homes. There was also £1bn allocated to support SME housebuilders and finally, the abolition of Stamp Duty for all first-time buyers of shared ownership properties valued up to £500,000 - which will be backdated to the date of the last Budget.
As ever the property industry was quick to react. Here's what they're saying...
Russell Quirk, founder and CEO of Emoov.co.uk, had this to say: “As expected, the Government has chosen to turn its back on addressing the current housing crisis and has instead deployed yet more cheap magic tricks and white rabbits in an attempt to divert our attention.
Retrospective stamp duty relief on shared ownership properties up to £500,000 is a very small give away and £500 million to help with an additional 650,000 homes will equate to nothing but rhetoric.
To say that the big developers are not land banking shows a completely naive disconnect from reality. Today absence of any meaningful housing announcements is disappointing, to say the least especially when housing is the second hottest political topic in this day and age.
We’ve been led to believe that this Government is serious about fixing Britain’s broken housing market, but so far their attempts equate to little more than plugging holes with PVC and sticky tape, rather than delivering a solution based on a watertight blueprint.”
Michelle Niziol, CEO of Michelle Niziol Bespoke Property Solutions, said: “It was tricks rather than treats for landlords tonight during the Chancellor’s autumn Budget, as new legislation further restricts Lettings Relief. This legislation is a punishment to individuals who have worked hard, and chosen to invest their hard-won earnings in property. Limiting Lettings Relief to properties where the owner is in shared occupancy with the tenant negates all the benefits that Lettings Relief was meant to offer.
There is no denying that the decisions made by the Government are the result of a lack of affordable homes and new housing stock for our growing population to live in. Buy to let landlords have been continually penalised by the Government in recent years, and this year was no exception.
In light of this new legislation, our message to landlords is don’t panic. Renting is becoming less of a dirty word in British culture, purely because of the freedoms that renting allows. The marked increase in the quality of rental accommodation by private landlords and the likes of new build to rent developments, highlights that the property industry is committed to making tenancy an enjoyable option.
In the long term, the shift towards rental culture is only expected to gain strength, placing landlords and property investors in the perfect position to supply what the market desperately needs. I was disappointed to hear the Chancellor’s plan to limit Lettings Relief, but am confident about the future of the lettings industry long term.”
Robert Nichols, chief executive of Portico, says: “Once again, private buy to let landlords have to get their heads around another tax change that will leave them worse off in the long run. The new restrictions on Lettings Relief is a further punishment to hard working individuals who have chosen to invest sensibly in residential property. Limiting Lettings Relief to properties where the owner is in shared occupancy with the tenant is as good as removing it in its entirety.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "The most disappointing aspect of this Budget is that nothing has been done to improve low transaction levels, which is not just bad for the property market but even worse for the wider economy. Given the rapid expansion of the private rented sector over the past few years, more support to Generation Rent would also have been welcome, such as sales of rental property to long-term tenants.
It is also disappointing that there was no comment on extending Help to Buy or further detail on how the government will meet its 300,000 a year housebuilding target.
On the positive side it is encouraging that there will be no further taxes on landlords or homeowners or on land sold for development.
The shared ownership extension of the stamp duty exemption to first-time buyers is welcome but the scheme is still not easy enough to get into or add to in our experience."
Jason North, Associate Director and London Property Specialist , had this to say: "If, in a parallel universe, the EU referendum had not come about, this chancellor's budget would have been welcomed as an uplifting and forward thinking affair. Just for a while there, the shadow created by the lengthy frustrating and protracted negotiations of achieving Brexit was lifted and one was able to believe that we as a country can come together.
Property did not pay a large part in the budget but there were further efforts to stimulate the first time buyers market and to open up fresh areas of the country for development. Until Brexit is resolved however, whether hard, soft or otherwise, values will continue to stagnate and decline. That fence which people are sitting on is becoming dangerously overcrowded. This time of opportunity for buyers should be grasped with both hands."
Benedict Hall, Director of BARNES Commercial Department, says: “From a commercial real estate investment viewpoint nothing dramatic or damaging was announced in this year’s budget, it was certainly targeted at UK families and workers. By comparison last year's budget introduced the revised taxation on commercial real estate for overseas investors which comes into effect from April 2019, I am sure this was taken into account in this year’s budget and it certainly hasn’t dampened the appetite for commercial investing.
The pot of money set aside to help the smaller high street businesses and retailers over the next two years will only help protect them as investment opportunities. What is more important is the £2bn set aside for Brexit which is paramount in ensuring the UK remains a safe haven for transparent and non-volatile commercial real estate investing going forward.”
Mark Dyason, Managing Director, Thistle Finance, commented: “There’s no doubt that office-to-residential conversions have had a positive impact on the number of new homes being built so any simplification of this process is to be welcomed. Empty commercial deadwood is helping to regenerate local neighbourhoods around the UK and it’s a trend that needs to continue. Coupled with the additional £500m set aside for the Housing Infrastructure Fund, the right noises are emerging from this Government.
The question, as ever, is whether the Government will simply talk the talk or actually walk the walk.
Over the years plenty of initiatives to get Britain building have been proclaimed with great fanfare and not one has made a material impact on the number of new homes being built. The problem is the revolving door at the housing ministry spins faster than any other government department.
There’s zero consistency, often zero ministerial understanding of the property market itself and, to top it all off, never enough time to stick to a coherent game plan.
What many in the property industry would like to see for the benefit of new build is a cross-party working group with a remit that extends beyond the parliamentary cycle and individual budgets.”
Philip Woolner, Joint Managing Partner, Cheffins, comments: “The country has not delivered on the numbers of affordable homes needed for decades and lifting the cap on money borrowed for council house building could be a significant game changer for the housing market. It could well have a bigger impact on the housing crisis than any other measures mentioned in this Budget or those previously. However, this needs to come conjointly with a raft of recruitment within local government.
The biggest blockage on housing and infrastructure delivery continues to be at Local Authority level where a lack of resources consistently delays the approval of planning applications and without the planning approval, there is no point in the government releasing cash which then cannot be spent. Local Authorities haven’t built quality homes for years and this will not be a case of just turning on the tap and expecting housebuilding across the country. Rather Local Authorities will now be under serious pressure to deliver quality housing in the correct locations.”
James Davis, Founder & CEO of online letting’s agency, Upad and himself a portfolio landlord, commented: “Whilst many landlords would have welcomed news that would have benefitted them; whether that be in terms of the Stamp Duty surcharge, or a review of mortgage interest relief, the reality is that landlords provide a vital service to the UK’s housing market and policy changes, or not, would make little significant impact to that.
Every year, without fail, UK Plc builds too few new homes. That deficit of new homes grows and grows and the contribution that the private rented sector makes in delivering sufficient quantities of homes is, therefore, vital. The government, after all, no longer holds any significant housing stock itself and people require a roof over their heads.
It would be nice if government viewed landlords with more respect and recognised that for many, working within the PRS is a business choice which should, therefore, command the same respect as more mainstream business areas. However, I honestly believe we’re needed and that, therefore, our future is safe.”
Andy Soloman, Yomdel CEO, had this to say: “This budget levels the playing field between the tech giants and the little guy, and I for one raise a glass to Mr Hammond for listening to the UK’s small businesses and delivering this big boost when they needed it most.
It will no doubt come as a kick below the belt for Bezos and Zuckerberg who have had it too good for too long at the expense of the smaller British retailer, who have been relying on seasonal boosts in sales just to keep their heads above water.
Technology plays such a huge part in our day-to-day lives, but it’s important that as it becomes more prevalent we don’t allow it to do so at the expense of British business.”
Neil Cobbold, chief operating officer of PayProp UK, said: "It’s surprising that the government did not announce a more stringent clamp down on short-term lets. This sector provides a great boost to the economy, but has grown rapidly in recent years and greatly affects the fortunes of the lettings sector, so it is arguably the right time for initial regulation.
There has to be an equal tax footing for conventional landlords and those looking to let their homes on a short-term basis, and the proposal for limited tax relief on properties where the owner is in shared occupancy with the tenant marks the very first step towards achieving that.
Over the next decade, it's likely that the short-term lets market will continue to expand, so it will be interesting to see if the government takes a similar regulatory approach as it has done with standard lets in the private rented sector (PRS).
On the lack of information on the implementation of the Tenant Fees Bill
The ban on upfront fees charged to tenants was first proposed by Chancellor Philip Hammond almost two years ago, along with a cap on security and holding deposits. Given the length of time that has passed, it's crucial that letting agents, landlords and tenants get more information about when and how it will be implemented.
Next year is set to be a crucial year for letting agents – now that they have more clarity, they can plan accordingly.
The Bill will pose a challenge for letting agents, but they must try to take the positives out of the situation. The fees ban will force agents to look for alternative revenue streams and streamline processes using technology. Over time, the best agents will become more profitable and work to a more slick and efficient business model than ever before.
On the missed opportunity to introduce tax breaks for landlords offering long-term tenancies
This would have been a welcome move by the government as it would have allowed landlords and tenants who want to pursue longer tenancy agreements to do so without making it a mandatory requirement for the entire PRS.
Industry research has shown that mandatory longer tenancies may cause some landlords to exit the sector, and that not all tenants are looking for long-term agreements.
However, for many landlords a capital gains tax break would be a timely incentive to continue to provide much-needed rental housing stock.
Such a policy could have provided vital feedback to the government's previously announced plans to introduce mandatory three-year tenancies, indicating whether long-term tenancies are needed or if they should remain an optional decision rewarded with a tax break."
Saadat Khan, CEO and Founder of Comfortable Living , said: “Any initiative to combat the inadequate delivery of property stock is a step in the right direction, but another lacklustre focus on property will no doubt leave UK home buyers and sellers feeling let down once again.
For far too long we’ve been held to ransom by the greed of the big house builders, dictating where and when they want to build and land banking in order to maximise their own profits. Yet again today we’ve seen the chancellor sidestep responsibility in bringing them to task on the issue of land banking and it leaves the small self-builders of this nation with little or no chance of competing.
The one slight silver lining was the additional amount of funding for the British Business Bank to support small developers, but this is merely tokenistic and is by no means enough.”
David Westgate, Group Chief Executive at Andrews Property Group, said: “News that Stamp Duty would be abolished for all first-time buyers of shared ownership properties up to £500k should be welcomed. I’ve made no secret of my views on how punitive Stamp Duty charges have exacerbated an already sluggish market and any move that will lessen the impact felt by purchasers is good news.
It doesn’t, however, go far enough and I maintain the view that a complete and thorough review of Stamp Duty is required. Such a review would result in radical change and whilst that might mean lower individual receipts in to the Exchequer, the impact it would have on overall volumes would at least cancel that out.
Let’s hope that today’s announcement is just the start of a move towards a fairer system of Stamp Duty.”
Mike Scott, chief property analyst at Yopa, says: "The measures announced in this year’s Budget are unlikely to have a significant effect on the UK housing market. The only measure that will directly affect homebuyers or home sellers is some additional first-time buyer stamp duty relief for shared ownership properties worth up to £500,000, which will help very few buyers. The new funding and support for house building in both the private and social sectors are welcome but will take years to actually deliver any new houses.
The significant increases to income tax thresholds will give a boost to disposable incomes, but unless mortgage lenders increase their income multiples this will not increase anyone’s purchasing power, since the amount you can borrow depends on the amount the lender will lend rather than the actual affordability of the repayments.
The Chancellor did not mention any changes to the Help to Buy scheme that supports the purchase of new-build homes, mostly but not exclusively by first-time buyers. However, the Treasury has today published a new evaluation of the scheme, which concludes “overall it is clear that the Help to Buy Equity Loan scheme continues to deliver within the policy terms set for it”, so it seems likely that the scheme will continue in more or less its present form."
Paresh Raja, CEO of Market Financial Solutions, said: “At a time when demand for property is outpacing supply, there is limited time left for the Government to improve accessibility to housing. Unlike the Spring Statement earlier this year, some important announcements were made, including the commitment to build an additional 650,000 new homes. Unfortunately, there were no new reforms to creatively increase the amount of private investment into derelict homes that could be renovated and put back on the market. The country boasts some of the world’s most desirable real estate, which is why we should be encouraging both domestic and foreign investment into the property market. It is also questionable whether the Government will be able to deliver on its new-build targets given its past track record.
It is easy to see why the Government keeps missing new-build targets: Housing Ministers are appointed and replaced at far too great a frequency. Since the Spring Statement we’ve seen a new MP enter the role, but how long will Kit Malthouse last? The Government must ensure there is strong, consistent policy in the property industry because it remains hard to pinpoint their long-term strategy at present.”
