There will be few of us, in any walk of life, who do not have at least one eye on 30 October, wondering what the Budget will mean for us personally, our work, and the wider property and mortgage markets.
It already feels like we have been waiting a very long time for this set-piece moment from the new government, and I can’t help but agree that – given the negative messaging that has been prevalent in recent months – we might all have benefitted from a Budget sooner rather than later.
From the property market’s perspective there is, as always, a considerable amount of speculation about what may be announced, heightened no doubt by a new administration and what may be a different set of priorities.
As always, there is talk about stamp duty reform or changes to the current thresholds, further first-time buyer or even downsizer relief, plus a lot of rumours swirling around regarding the raising of capital gains tax (CGT) levels on investment and additional property sales to make them in line with income tax, further speculation about wealth taxes and how they might look, and again a focus on whether this government will continue to pursue policies that are not exactly landlord-friendly.
What’s in store for the housing market?
Of wider interest is perhaps how the Budget might literally divide up its budget for certain government departments and how that might impact the work that has been ongoing, specifically from a housing perspective.
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We know the government has said it is committed to leasehold reform and the move to commonhold. We know it is committed to building more homes and a ‘Yes in my backyard’ approach focusing on removing planning and development obstacles in order to reach its 300,000 new homes target each year, and there are reforms for renters, plus greater responsibilities for landlords in terms of the homes they offer, their quality, and the cost to tenants.
A more overarching commitment of the previous government was to improve the home buying and selling process.
As we all know, the process is unremittingly lengthy and, as a result, means there is a far greater chance of aborted transactions before completion, with all the wasted cost and resource issues this generates, not least for advisers, who won’t get paid until completion, and the estate agents, who lose the work already committed to when the seller of the property then sells via a competitor.
It seems, from initial discussions, that this government remains committed to such an improvement, looking at how it can streamline property transactions, to make the process faster, less costly and more transparent.
Improving the home buying and selling process
How it does this is still up for discussion, and if you’d like your clients to feed into what they’d like to see, then I would suggest you point them in the direction of a new research initiative from the Open Property Data Association (OPDA) that seeks to “gather insights from buyers on how the UK home buying process could be improved”.
They, after all, have first-hand experience of it: https://www.surveymonkey.com/r/OPDA2024
One potential measure that continues to be discussed is ‘reservation agreements’.
As a body, we tend to be ‘reservation agreement agnostic’ in terms of whether there is evidence to suggest their increased usage would speed the process up significantly. Though Conveyancing Association (CA) members who are using reservation agreements with upfront information (UI) claim to have achieved minimal fall throughs and transaction times to be proud of.
At a meeting of our members – many of whom do not currently use reservation agreements – in May this year, we asked them their opinion and it was universally agreed that, on their own, they would not reduce fall-throughs.
However, combined with other initiatives – such as the provision of UI – there was a good chance of a smoother process and less pulling-out of deals later down the line.
Clearly, these types of agreements are a standard part of new-build purchases. However, our membership felt their wider success would be predicated on.
For example, the customer also having a mortgage offer, on there being a related transaction taking place, and of course, there needs to be a clear understanding of the reasons that are not justified when pulling out of a transaction as well as the penalty for doing this. All of these were included in the Home Buying and Selling Group (HBSG) version of the reservation agreement, which never got to pilot during the last government’s tenure.
There was a case, back in July, where a buyer had to pay £35,000 in a case relating to the enforcement, and breach, of a reservation agreement.
Given this went through an internal arbitration process, overseen by an independent judge and King’s Counsel, you can imagine a lot of these costs were made up by legal fees rather than being the cost for breaching the agreement itself. However, if we do have precedents to fall back on, you might argue that the case for reservation agreements being in place is strengthened.
Overall, what we clearly want from the government in this area is a continued commitment to make the home buying and selling process more efficient, quicker, more transparent and less costly, while it encourages greater use of the digital services, options and technology available from all stakeholders.
We shall be watching and waiting with great interest to see what happens on 30 October and beyond.
