As we move towards Philip Hammond’s budget on Wednesday the Chancellor of the Exchequer is a hot topic amongst property experts. This will be a vital budget for the UK property market bearing in mind the challenges in light of Brexit and the ever-growing cost of acquiring a property in the UK. The government did acknowledge problems within the UK property market in its recent White Paper and many hope the Chancellor will expand on this. So, what are the main hopes and aspirations for Wednesday’s budget with regards to the UK property market?
Radical change in stamp duty
A number of experts have stepped forward to suggest a radical change in the way in which stamp duty is charged across the UK property market. We take it for granted that buyers pay stamp duty but some experts believe it is now time to switch the tax to sellers. For those acquiring a property and then looking to move up the property ladder, whether they pay stamp duty on their sale or stamp duty on their purchase is neither here nor there. However, the situation regarding first-time buyers is very interesting.
Anecdotal evidence confirms that many first-time buyers are struggling to accommodate stamp duty charges together with deposit requirements and transaction costs. If the charging of stamp duty was switched to the seller then this would encourage more first-time buyers into the market, improve liquidity, increase demand and also allow the UK government to raise more from property taxes. It may sound radical and bizarre but is the switching of stamp duty from property buyers to property sellers really out of the question?
Greater emphasis on new builds
All parties acknowledge that the UK is running well behind the new build requirement of today together with a massive lag on historic requirements. We are literally talking of a shortage of newbuilds well in excess of 100,000 and growing. A number of experts are again calling for new help to buy schemes and the expansion of shared ownership projects both of which have proved to be very successful in the past. When you also bear a mind there is a skills shortage in the UK construction market there does need to be significant investment, or tax incentives, in this particular area as well.
The issue of newbuilds is very interesting because there are literally hundreds of thousands of properties in the UK which are currently vacant/in need of repair. Local authorities have for some time had the power to compulsory purchase such properties although it is unclear as to whether they are making full use of this option. Surely a mixture of newbuilds and rebuilding of vacant/derelict properties across the UK would go a long way towards solving the UK housing shortage?
The reality is that such radical moves as switching stamp duty on property transactions from buyers to sellers is sensible but unlikely to happen. We will see more promises on new builds although in reality the government has failed to deliver on past promises. There will also be the “multiple spending” strategy using smoke and mirrors to give the impression that more money is being invested in theory than reality. There is a problem, everybody knows it but which political party will actually make a meaningful change?