Dis­ap­point­ment in UK as Os­borne’s Bud­get only skims the sur­face of hous­ing cri­sis

Financial Mirror (Cyprus) - - FRONT PAGE -

Few of us ex­pected UK Chan­cel­lor Ge­orge Os­borne to do a U-turn in his Bud­get speech on the tetchy sub­ject of ex­tra stamp duty for ad­di­tional homes, so we have to move on and re­alise this is a re­al­ity and one the prop­erty in­dus­try has to work with.

But what is far more im­por­tant is the ef­fect it will have on the prop­erty mar­ket.

Per­son­ally I still think that it is wrong to add a 3% stamp duty sur­charge as I fear it has been a rev­enue rais­ing ex­er­cise rather than a real at­tempt to even out the mar­ket.

You just have to look at how peo­ple buy­ing ad­di­tional homes have af­fected the mar­ket in the months since the new sur­charge was an­nounced in the Chan­cel­lor’s au­tumn state­ment; prices have con­tin­ued to rise, many first time buy­ers still strug­gle to save for a de­posit and the much flaunted plan­ning changes are slow com­ing.

There also seem to be blurred lines

be­tween

the def­i­ni­tions and dis­tinc­tions of what the changes to stamp duty mean. The Trea­sury has re­leased some more de­tails but the or­di­nary buyer and seller out there are still con­fused, es­pe­cially when it comes to a sit­u­a­tion where a di­vorce or sep­a­ra­tion is tak­ing place or a cou­ple mov­ing in to­gether both have a prop­erty to sell.

I am also con­cerned about the ef­fect on the pri­vate rental sec­tor. New homes are not be­ing built fast enough to meet de­mand and if land­lords, as many have sug­gested, put up rents to meet the ad­di­tional costs they face not just from stamp duty but also change to in­ter­est tax re­lief, then that will be a ma­jor blow.

Sup­ply is a big prob­lem and if lots of land­lords, again as has been sug­gested, leave the PRS then there will be even fewer homes on of­fer. Also, as­pir­ing first time buy­ers pay­ing higher rents will have even less to put to­wards a de­posit and I don’t think the new ISAs are the an­swer to that one.

The pro­posed plan­ning changes need to be re­ally dra­matic to have an im­pact and coun­cils need a big shove to make find­ing land eas­ier for self-builders who, in­ci­den­tally look set to be hit by the 3% stamp duty sur­charge.

This is where de­tails are again lack­ing but it looks as if any­one buy­ing a plot that is on res­i­den­tial land will have to pay the sur­charge un­less they have sold their ex­ist­ing prop­erty first. They can re­claim the tax later pro­vid­ing they sell their cur­rent home within 18 months, but it is yet an­other sig­nif­i­cant fi­nan­cial bur­den on those who want to build their own home.

There is in­deed much to mull over in the Hous­ing and Plan­ning Bill but doubt re­mains as to the ex­tent to which the pro­pos­als will in prac­tice speed up de­vel­op­ment on any­thing other than small sites. And while the de­ci­sion to ear­mark brown­field sites for new Starter Homes is wel­come, none will ac­tu­ally be ready for oc­cu­pa­tion be­fore 2020.

So, it was a dis­ap­point­ing Bud­get. The UK is in the grip of a hous­ing cri­sis with lack of sup­ply at crit­i­cal lev­els. Yet noth­ing in the Chan­cel­lor’s speech ad­dressed the con­tin­ued up­ward march of house prices and I fear that the much flaunted plan­ning changes aimed at speed­ing up the process so that more new homes can be built more quickly will be a long time com­ing.

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