Thoughts for the Chancellor to take into consideration for his forthcoming Budget

 

Thoughts for the Chancellor to take into consideration for his forthcoming Budget

The top priority for the government is to increase the housing supply for the UK. We build approximately one third of the new homes that we require to sustain ourselves and any measures by the Chancellor, in his forthcoming Budget, must be directed towards fixing the broken housing market.

Here are some ideas:

1. The Help-to-Buy deadline should be extended, since this initiative is single-handedly, assisting the first-time buyer in order for them to get their ‘foot on the property ladder.’ It is also providing welcome liquidity to the market between £300,000 to £400,000. Let’s put it this way, developers would be in a parlous state without it, particularly where there is over-supply.

2. There is talk of an additional Stamp Duty surcharge for international buyers of up to 3%, which means that the total SDLT charge could be as much as 18%, at the higher price ranges. With this, together with the changes to tax relief on mortgages for buy-to-let investments being confined to the lower tax band, the numbers of sales in this category, as a result, could drop even more significantly, adding to the recessionary environment.

3. There is talk of allowing homeowners to build another entire storey on their property, without the need to apply for planning consent. This will annoy and irritate the local planners, since they will lose control, but it may make the process much more efficient for some, who would rather invest in their own property, rather than pay an exorbitant Stamp Duty to move.

4. I am sure that he will restrict the ability of developers to charge penal ground rents on new leases granted for new developments, which will be kept at a peppercorn ground rate. Although I have to say that on most of the new build sites I come across, it is usual for the developer to pass the freehold to the residents, gratis, when the scheme is finished. The homeowners, therefore, share this between them through the management company, although this is not so much the case where there is a mixed development of commercial and residential units.

We hope that the Chancellor will attend to the following:

1.Regulation is ‘snarling up the process of funding for new construction and for that matter, the simple process of obtaining a mortgage for domestic buyers. Any help that he can provide to make this more efficient and less labyrinthine and bureaucratic, would be welcome.

2. The councillors and planners are too obsessed with local, petty politics and with the housing problem today, being so important to solve, isn’t it about time that planning applications are adjudicated by the Department of Environment instead, which would usefully restrict the criteria for decision making to planning matters alone, as it should be?

3. I do hope that he will not think of another ‘damn fool’ regulation for letting agents, who are presently ‘gagging’ under the strain of all of the necessary bureaucracy, under the existing regulations.

I wish that the government would ‘wake-up-and-smell-the-coffee,’ since there is an intrinsic link between the Residential Property Market, retail spending and the growth of the Economy.

As a result of the Stamp Duty measures by the former Chancellor, together with subsequent Tax changes with regard to Buy-to-Let investors, these have, in aggregate, created a recessionary property market, which is the antithesis of what we need in this post Brexit era, as we try and shape our future and destiny as a ‘go-it-alone’ nation.

Whilst Stamp Duty, for the Treasury, may be slightly improved, were the Chancellor to take the holistic view, he would then see that the losses are mounting in respect of lower construction activity and lower tax receipts, from retail sales generally.

We all know that the Housing Market is a powerful, political, weapon, but it doesn’t get more homes built if the developers are trying to sell into a recessionary market, where there could be a massive stock over-hang, in certain parts of the UK, and this will reduce the incentive for them to build more homes.