A month on from the Budget and it perhaps tells you a great deal that many of the proposals announced are still leading the news agenda. And not in a good way.
Specifically, we have the increase to employers’ National Insurance contributions (NICs), which is being held up as a potential, and severe, drain on businesses’ ability to invest, resource up adequately, maintain profitability – you name it.
Dragging it back to our sector, it’s quite clear the Budget pretty much neglected the housing market, even though you might quite rightly argue it is a huge driver of economic positivity in our country and has the potential to create a significant amount of revenue across multiple professions and for the Treasury itself.
An ignored housing market
Instead, we are presented with a void, perhaps only very partially filled with talk about the number of new homes that might be built, and some planning reforms designed to make this happen.
However, I can literally find nobody who believes the government will get anywhere near its one-and-a-half million homes target, and we have also recently found out that half of those won’t be available to buy privately anyway, with 750,000 being earmarked for social housing tenants.
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Instead, what we did have was a government seemingly willing to follow a narrative entitled, ‘Landlords must continue to be punished’, or, ‘First-timer good; landlord bad’, without even recognising that by punishing the latter, it also impedes the former.
So, completely out of the blue, we have a decision to increase the stamp duty surcharge on the purchase of additional homes, mainly impacting landlords, of course.
What was odd about this decision was the fact it wasn’t expected at all. The Chancellor and her team held lots of meetings with mortgage and housing industry figures and still felt that an approach that actively seeks to reduce supply in the private rented sector (PRS) was one worth pursuing.
This is despite the fact we have many landlord clients who tell us that, on a weekly basis, they are approached by local authorities asking if they have any spare property capacity, willing to pay market-leading rents, all because their supply is wholly inadequate to deal with demand.
So, in a PRS where housing stock is nowhere near what is required, you have a government that wants to make it more onerous for landlords to buy property – not seemingly understanding that this will cause rents to rise, will impact would-be first-timers who have no option but to rent and pay the extra costs, and will therefore take longer to save the deposits they require to get on the ladder.
Add to this the fact it was brought in with immediate effect. As a result, we have had a significant number of landlord clients going away to renegotiate purchase prices, and you do have to question whether the government has any real clue about what works in the housing market, what is worth coveting, and what is merely going to impact negatively on all.
Minimal measures to prop up homeownership
So, we have no Help to Buy replacement, a continued focus on a mortgage guarantee scheme – which lenders don’t even want or need to use – an increase to landlord stamp duty, a decision to go back to the previous stamp duty thresholds for first-time buyers next year, no focus on incentivising older homeowners to downsize and free up much-needed larger homes, and a complete disinterest in the benefits that a buoyant and soundly functioning housing market can have on the country’s economic growth and wellbeing.
It’s not hyperbolic to suggest that the country often feels better about itself when the housing market is functioning well; such is our firmly held belief in property ownership that presenting greater options for those who want to get on, or move up, the ladder is obviously a positive feeling for many.
To know that you have options and that the government gets what you want to achieve cannot be underestimated.
Instead, what we have all been presented with is a bleak picture of what living in the UK is, with no joined-up thinking about how the different tenures function, and a continuation of policy that ultimately disincentivises everyone, particularly those who would like to buy, whether private owner or landlord.
This is a discouraging Budget and, as a result, a huge opportunity missed. I sense the best we can say is it is now out in the open and there will be increased stability due to that.
However, I also believe the government will come to regret much about the measures outlined in the Budget, or in the case of the housing market, the lack of measures.
That being the case, and without political assistance, we will be relying on the ‘will of the people’ to generate activity, and with rates likely to come down, we should be able to see an increase in demand and transactions.
As always, clients will need advisers more than ever to navigate market complexities and potential turbulence, so despite a lack of positive intervention, there will still be opportunities to grasp and make the most of.
