Business As Usual

Budget Boost For Home Buyers


Edward Heaton, founder and managing partner of buying agents, Heaton & Partners takes a look at the current position of the housing market

The delay in the introduction of the stamp duty surcharge for international buyers until April 2021 should help give London’s prime property market some helpful breathing space to recover after several years of uncertainty. The fact that this levy is 2% instead of the predicted 3% will also help ease the pain to prospective overseas investors. We may well see a rise in overseas buyers in the short term to get deals over the line before next April.   

The property market is up against many obstacles right now: Coronavirus is reducing supply and transaction growth; the UK is tackling its worst flooding in decades; and buyers pay some of the world’s highest property taxes already. With looming Brexit trade negotiations affecting market confidence – both in attracting foreign investors and housebuilders who rely on European materials – is now the right time to announce further tax hikes that could be discouraging overseas investment?

The new surcharge will be in addition to stamp duty and the 3% levy on the purchase of second homes or buy-to-let properties, leaving many with a sizeable tax bill. When enacted, it could cause an issue with liquidity at the super prime end and might encourage prospective buyers to rent instead of buy. This will be an increasing trend to keep an eye on in the capital and could inadvertently boost the luxury rental market, but is a risky move overall to deter overseas wealth at a vulnerable economic time for the UK.

It’s encouraging to see the Bank of England alongside the new Chancellor take active measures to stem the economic impact of Coronavirus - cutting the base rate will be vital to ride out the storm. Banks including NatWest and RBS have confirmed today they may defer mortgage repayments for those affected by the virus, which is positive news for many homeowners who will be concerned about their jobs. The key to knowing where the property market is heading is in whether lenders will remain active and pass on base rate savings to new homebuyers, and whether buyer sentiment decreases. If people are worried about their jobs, they won’t be moving house any time soon.

Whilst it might have been nice for there to have been some wider stamp duty reform, we can still hope this will follow in time. It would have been good to see further measures to address the continued squeeze on buy-to-let landlords, to deter them from leaving the private rented sector altogether. Private landlords are vital in keeping housing supply in balance for millions of renters, keeping rents down and incentivising longer term tenancy agreements.

Jimmy Acton, Managing Director at Property Booking, says:

“First time buyers propped up the market in 2019, with record numbers getting onto the property ladder when compared with 2018 figures. A combination of low interest rates, a dip in house prices and a rise in popularity of schemes such as Help to Buy and shared ownership created the perfect conditions for first time buyers. However, for this trend to continue, the government needs to ensure that access to quality and affordable housing for first time buyers remains high up the agenda. The Prime Minister mentioned today that he wants to build more houses at a better standard, building beautiful homes that people actually want. I hope this means real support behind ‘Building Better, Building Beautiful Commission’, letting home buyers move to lastingly beautiful developments.

“Providing support to the lower rungs of the property ladder through new ways, such as the First Homes Scheme, means that people don’t miss out on the opportunity to invest in their own future like generations gone past have been able to enjoy. It will be interesting to see how local authorities and developers manage the scheme, and whether other affordable homes – such as through affordable rent or shared ownership – will take a back seat to make way for the First Home Scheme.

“There needs to be a meaningful commitment from the government to support first time buyers, not only with the creation of new schemes, but also when it comes to promoting the help that is currently available. For example, so many would-be buyers haven’t even heard of shared ownership, despite it having been around for decades! There has been some progress in helping first time buyers, such as with Help to Buy, but the scheme has a shelf life – it’s really important that the government steps up and offers a range of options to support first time buyers.”



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