As ever, the devil is in the detail with regards to government announcements with the autumn statement under particular scrutiny. While it is impossible to cover every aspect of the autumn statement in the Chancellor of the Exchequer’s speech there is more to this than meets the eye. Below we have listed a number of actions from the autumn statement which will have an impact on the UK property market.
New housing fund for London
Housing has always been a problem in London because wages vary so widely and property is in great demand. So, the announcement that the UK government is putting aside £3.15 billion to build 90,000 new houses in London has been well received. It will take time to feel the benefit of this ongoing investment which will ultimately be used to reduce rents to below the “market value” – measured as no more than one third of the average local income for middle income earners.
There will also be help in the shape of shared ownership schemes for those looking to acquire property in London but struggling to raise the funds.
Additional investment in affordable homes
All governments seem to be a little vague when announcing investment in “affordable homes” although the £1.4 billion put aside by the current government will be well received. It is expected that this investment will fund around 40,000 “affordable homes” but so far there is little in the way of detail. In the past some governments have announced an investment in affordable homes more than once giving the impression of a greater investment in theory than in reality. All the same, an investment of £1.4 billion whenever this may happen will be extremely helpful.
Letting agent fees
The announcement that letting agent fees across England and Wales will be banned in due course has grabbed some headlines. This move is currently out to consultation with various parties and the authorities will report on this plan in due course. The idea that letting agents may be “double charging” tenants and landlords is not a new concern but obviously needs to be addressed. It is interesting to learn letting agent fees have been banned in Scotland since 2012 and this has had little or no impact upon rental figures.
Apparently an additional £2.3 billion has been put aside to increase housing infrastructure for areas where there is significant demand. The idea is that additional housing in these areas will reduce the ever spiralling cost of property and assist those looking to climb onto the property ladder. As ever, the government is very keen to make headline grabbing statements but so far there is very little detail in the public domain.
No reduction in property taxes
It is no secret that the UK government has increased the cost of acquiring property over the last few years. As we have mentioned on numerous occasions, this constant milking of the UK property market may well be coming to an end. There is talk of a potential £10 billion shortfall from the London property market alone over the next five years due to higher stamp duty rates. It is certainly unfair to target the property sector time and time again to fill budget black holes but at the moment it seems to be the flavour of the day.
New housing funds, additional infrastructure investment and a ban on letting agent fees in England and Wales made the headlines just as the government had hoped. The devil is in the detail and so far on the whole these are excellent moves for the UK property market in the longer term but there is no timetable as such. Time and time again we see governments promising significant investment in housing infrastructure only for timetables to slip and eventually fail. Will we see this government deliver on much-needed housing investment?