Autumn Budget 2017

INDUSTRY CHATTER

24 November 2017

Earlier this week, the UK’s Autumn Budget – billed as the ‘Housing Budget’ – was delivered by Chancellor of the Exchequer Philip Hammond. In the run up to the speech the prime minister alluded to policies that would ‘build more houses, more quickly’ and during the delivery, Hammond pledged to make ‘the dream of homeownership a reality for all generations’. So what does it all mean…and will the plans really help to solve the UK’s housing crisis and discourage land banking?

Arguably the most notable change which has been making headlines ever since was the abolishment of Stamp Duty and Land Tax (SDLT) for first time buyers on purchases of up to £300,000 outside of London or an exemption from Stamp Duty on the first £300,000 of a property’s value (up to £500,000) inside London.

In theory, this reform has the potential to save the average First Time Buyer thousands of pounds – money which one assumes can then be put towards a deposit. The exact details and stipulations are still to be communicated, however the incentive looks set to greatly enhance the likelihood of First Time Buyers’ chances of setting foot on the fabled property ladder. In turn, this should stimulate wider activity across the market as a whole and create a new wave of demand for properties at the lower end of the spectrum.

So far so good, but surely this puts increased pressure on the already minimal housing supply and has the potential to push prices up even further? A plausible concern it seems, and one that looks likely to loom until stock levels have caught up with demand. Experts are urging those thinking of buying to act fast to ensure they purchase before prices peak and those thinking of selling homes suitable for first-time buyers to come to market as soon as they can.

In acknowledgement of this crisis of demand it was announced that £44bn of money for housing is confirmed over the next five years. £15.3bn of this is new spending and will be focused on funds to help SME builders and develop infrastructure that can lead to new housing. Planning changes were also announced to allow higher density building in urban areas.

Housebuilders meanwhile were challenged by Hammond’s planned review into land banking including the potential use of compulsory purchase orders. There was also an unexpected announcement that the Government would abolish a capital-gains tax exemption for foreign owners of UK property from April 2019. Given the high percentage of international owners in London, this change is likely to bring significant changes in the years ahead.

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Earlier this week, the UK’s Autumn Budget – billed as the ‘Housing Budget’ – was delivered by Chancellor of the Exchequer Philip Hammond. In the run up to the speech the prime minister alluded to policies that would ‘build more houses, more quickly’ and during the delivery, Hammond pledged to make ‘the dream of homeownership a reality for all generations’. So what does it all mean…and will the plans really help to solve the UK’s housing crisis and discourage land banking?

Arguably the most notable change which has been making headlines ever since was the abolishment of Stamp Duty and Land Tax (SDLT) for first time buyers on purchases of up to £300,000 outside of London or an exemption from Stamp Duty on the first £300,000 of a property’s value (up to £500,000) inside London.

In theory, this reform has the potential to save the average First Time Buyer thousands of pounds – money which one assumes can then be put towards a deposit. The exact details and stipulations are still to be communicated, however the incentive looks set to greatly enhance the likelihood of First Time Buyers’ chances of setting foot on the fabled property ladder. In turn, this should stimulate wider activity across the market as a whole and create a new wave of demand for properties at the lower end of the spectrum.

So far so good, but surely this puts increased pressure on the already minimal housing supply and has the potential to push prices up even further? A plausible concern it seems, and one that looks likely to loom until stock levels have caught up with demand. Experts are urging those thinking of buying to act fast to ensure they purchase before prices peak and those thinking of selling homes suitable for first-time buyers to come to market as soon as they can.

In acknowledgement of this crisis of demand it was announced that £44bn of money for housing is confirmed over the next five years. £15.3bn of this is new spending and will be focused on funds to help SME builders and develop infrastructure that can lead to new housing. Planning changes were also announced to allow higher density building in urban areas.

Housebuilders meanwhile were challenged by Hammond’s planned review into land banking including the potential use of compulsory purchase orders. There was also an unexpected announcement that the Government would abolish a capital-gains tax exemption for foreign owners of UK property from April 2019. Given the high percentage of international owners in London, this change is likely to bring significant changes in the years ahead.

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