No quick fix, but foundations to help boost UK housing market are there

There were a lot of negative headlines after last week’s Budget, but as far as the housing market is concerned it was a good one with the abolition of stamp duty for firsttime buyers the star of the show.

Indeed, I thought Chancellor Philip Hammond was very clever. The industry had lobbied hard for a change to stamp duty to keep the housing market moving and a temporary suspension for first-time buyers was expected. But Phil went further and got rid of it with immediate effect.

Now we know it will affect first-time buyers in some parts of the country more than others as the average price paid by first timers is lower or close to the GBP 125,000 threshold where the property tax kicks in. But I thought it was a bold move.

From a PR point of view, it lets the government show that it is listening, that it took on board what was being said and acted upon it. Whether it will actually do an awful lot in terms of making the market more fluid is another matter as there are not enough homes for first-time buyers and those moving up the ladder are not enjoying the stamp duty abolition.

Phil was right to point out that there is no quick fix for the supply crisis, but he also announced a series of measures aimed at sorting that, including upping the number of new homes to be built a year to 300,000, financial help to get things moving along faster, particularly funding for smaller builders, and a crackdown on developers who hoard land and councils who hold up building.

The abolition of stamp duty will have an immediate positive impact on the ability of young people to get on the property ladder. It will also reduce some of the stress associated with home ownership and there is little doubt that it has been preventing thousands of sales from going through.

There will, of course, be those further up the housing market who cannot afford to move and some thought that the Chancellor might have done something for retired people to encourage them to downsize; and while for those living in London and the South East still face higher stamp duty costs, the hurdle is much lower.

However there is one downside and that is that prices could rise as a result of the abolition of stamp duty for first-time buyers. Indeed in a press note on Budget Day, HMRC confirmed that it expects this to happen.

“Paying no SDLT reduces the upfront cost of buying a home for first-time buyers. This measure is expected to lead to a small increase in house prices in the first year after implementation,” it said.

The note from HMRC also suggests that to avoid paying stamp duty, if buying as a couple both purchasers have to be first-time buyers. This raises the prospect that if a couple are buying and one has owned a home before they may not qualify for firsttime buyer status.

There wasn’t much news for buy-to-let landlords apart from the announcement of a consultation on longer tenancies. This was a good thing as it allows landlords to bed down the raft of tax and other changes relating to lending that have been introduced in recent months.

Most agree that longer tenancies are a good thing for landlords and tenants, giving flexibility and security and the consultation allows the lettings industry to have its say, and going with the current flow the government will listen. Also, there have been hints that there could be tax incentives for landlords who offer longer tenancies.

I had my doubts that this government was going to get to grips with the housing issues and concerned that Brexit would take up all the time, money and energy, but it seems that there is an appetite for change.