Our Chairman, Nick Leeming, comments on the 2016 Autumn Statement:
Wednesday’s Autumn Statement announcement was good news for the new homes sector. The Government is now prioritising housing for those who need it most with a huge funding boost of £2.3 billion to support the building of more new homes – but the statement didn’t go far enough. We won’t see the Housing White Paper until the end of the year, but it was disappointing that stamp duty was not addressed in Philip Hammond MP’s speech.
Our recent research shows there has been a 14% reduction in housing transactions year on year as a result of stamp duty changes, and a £400 million shortfall in stamp duty revenue from residential property transactions against predicted revenue this financial year. A cut in current prohibitive stamp duty levels would help get the market moving at all levels and give welcome relief to first-time buyers, who are having to grapple with a multitude of costs including saving for a deposit and it is a shame that Government does not see them as a priority. With so many first-time buyers unable to make that first step onto the property ladder, a reform would have resulted in a chain reaction at all levels – allowing them to join the housing market.
One of the biggest housing announcements to come out of yesterday’s Autumn Statement was the abolishment of lettings fees. This appears to be good news for renters on first look but experience shows that any savings to the tenant will likely be passed on to the landlord who in turn could then pass them back on to the tenant through increased rent as they seek to cover their costs. This could prove yet another challenge to landlords who have faced a number of increased costs over recent months, including the additional 3% SDLT levied when they purchase a rental property and also the abolishment of mortgage interest rate relief which is set to commence in April next year.
Although the ban on lettings fees still requires a Government consultation before it is implemented, its impact on the UK housing market could be far reaching. Affordability issues which surround purchasing homes means that for many, the only option is to rent. We’ve seen a consistent reduction in the number of landlords buying investment properties since April this year which means that fewer rental properties are now coming on to the market. A better solution would have been to create a more competitive fee environment to ensure landlords are not further discouraged from the market.