Changes to the UK housing market were absent from today’s Spring Budget, prompting many from the industry to suggest that Chancellor Jeremy Hunt missed a trick.
A small change which was not announced in the speech was an update to the VAT: DIY Housebuilders Scheme Digitisation Project. The government said it would leglislate to digitise the scheme and extend the time limit from making claims from three to six months.
The scheme allows people who are building their own homes or converting a non-residential property to be seen as comparable to if they had purchased from a developer, meaning they can reclaim VAT on certain goods and services.
The government said the changes should “should improve the overall customer experience and reduce the administrative burden for claimants and HMRC”.
Nothing to address the housing crisis
Richard Fearon, CEO of Leeds Building Society, said there was a “missed opportunity” for the Budget to grow the economy through the homeownership crisis caused by a lack of housing and support for savers.
He added: “While it is particularly positive to see support for families with young children struggling with the cost of childcare, we know that owning your own home also brings huge economic, education and health benefits.
“With the affordability of homeownership now at its worst point for 150 years it is clear that support for first-time buyers must be a key battleground at the next General Election.”
Nigel Purves, co-founder and CEO of Wayhome, agreed that first-time buyers were “tackling the highest cost of homeownership on record” and said it was disappointing that the government had turned its back on them.
Purves said he was not expecting to see another stamp duty incentive but said “a commitment to at least building more homes would have been a start.
He also said a stamp duty law to equalise the different home buying schemes could have been helpful, so people who bought their home in stages would not be charged the same rate as second home buyers.
Brian Murphy, head of lending at Mortgage Advice Bureau, said the extension to the Energy Price Guarantee was welcomed, but it was yet to be seen whether any support to improve the energy efficiency of homes would be coming.
No incentives for buyers
Nick Chadbourne, CEO at LMS, said it was concerning that there were no announcements to stimulate either the residential or buy-to-let sides of the market, particularly considering the turmoil caused by the last Chancellor’s mini Budget.
He suggested increasing housing stock by loosening planning restrictions and changing the policies that deter landlords.
Jonathan Samuels, CEO of Octane Capital, said: “The government has made numerous legislative changes to ‘improve’ the rental market at the expense of the nation’s landlords, changes that have ironically led to higher rents, less accommodation and lower standards.
“We were hoping that they had finally realised the error of their ways and wanted to once again tempt buy-to-let investors back into the fold.
“Unfortunately, this hasn’t been the case and, with them also pushing forward with changes to Capital Gains Tax allowances, we expect to see more landlords exit the sector as a result.”
Nick Sanderson, CEO at Audley Group, added: “Another opportunity for housing reform has sailed on by. An innovative Chancellor would have used his time at the dispatch box to set out reforms that place as much emphasis on later living as first-time buyers.”
He said a stamp duty holiday would have been “unrealistic” but a reform should have been considered, adding: “if there is no fluidity, people stay in family homes that are too big and unsuitable for them.”
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “This has turned out to be the budget where home buyers were forgot.
“The Chancellor’s had a lot of pressure to help those struggling with the cost of living, while avoiding a repeat of the events in September, but that doesn’t mean support for home buyers should be ignored.
“The government can’t singlehandedly erase all the challenges homebuyers are facing, but they can certainly play their part. Even something as small as making the new stamp duty thresholds permanent would have been a bonus, but to see nothing is incredibly disappointing.”
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Impact on mortgages
Although nothing about the housing market was explicitly announced, it was noted that some of the changes could still influence mortgage lending.
Adrian Anderson, founder of Anderson Harris, said the expansion of free childcare offered help to working parents.
He added: “Childcare fees of potential borrowers are scrutinised by the banks and have a real impact on the affordability capacity for those seeking mortgages. Childcare fees were making some families unmortgageable.
“This expansion of free childcare in 2024 will make unmortgageable families – due to childcare costs – mortgageable, enabling them to get on the ladder or secure the right property to meet their needs.”
Will Hale, CEO of Key, said encouraging more people to work longer bore some consideration for the mortgage sector.
He added: “If more people anticipate working well into what was once retirement age, then we need to consider whether we have enough flexibility built within products aimed at older customers to allow repayments to be adjusted according to the different income levels they receive in employment, part-tirement and retirement.
“The later life lending industry already meets many of these needs but taking the time to consider whether we can do more to encourage active management of debt as people age, provide more opportunities to access housing equity and boost the use of new – and potential – flexibilities, needs to be front of mind.
“What customers expect is changing and we need to consider how we best support this.”
Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.
Not a bad thing to be ignored
Paresh Raja, CEO of Market Financial Solutions, said although there are housing market issues which need attention, Hunt prioritised “other pressing concerns”.
He added: “In truth, the property market could benefit from the Chancellor’s prudent economic approach. While there may not have been any noteworthy policies or investments relating specifically to property, his efforts to combat the cost-of-living crisis and bring much-needed stability to the economy should be welcomed.
“We saw how tumultuous the effects of the mini-Budget were back in September. Hunt has favoured a cautious approach, and the property market will likely benefit from a sense of economic calm, particularly if inflation continues to fall and interest rate hikes come to an end.”
Andy Sommerville, director at Search Acumen, said the Budget was one that “gives with one hand and takes with the other”.
“Investment Zones provide the potential for deregulation and simplification of the planning system, which will be attractive to developers and a potential stimulus for local economies, while tax incentives will support the occupier market in these locations,” he added.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said while the industry wanted to see more from the Budget with regards to housing, ““In some ways it could be seen as a positive Budget in that the Chancellor left the housing sector well alone”.
He added: “Housing makes such a significant contribution to economic prosperity due to its multiplier effect so is sensitive to even small changes.
“More specifically, the housing market is all about confidence and sometimes you can do more damage by tinkering so we will give him a B-plus for effort and not doing anything which could have been harmful and compromised activity.”
By Shekina Tuahene
Source: Mortgage Solutions
