Chancellor of the Exchequer Philip Hammond delivered a Spring Budget 2017 totally devoid of any help for the UK’s struggling housing market. It also failed to lessen or backtrack on recent Stamp Duty hikes for landlords or the lettings fees ban.
The only palpable good news for agents includes a mooted extra tax for digital-only businesses to level the playing fields with their high-street competitors – something for agents facing competition from online-only and hybrid ones.
Other business benefits within the budget include a reduction of corporation tax from 19% to 17% by 2020 and that businesses with turnovers below the VAT threshold will be given a year’s grace before having to start quarterly digital reporting.
But for the industry’s 20,000 branches, a much-hoped-for reform of the business rates system did not materialise as major hikes loom for many high-street operators.
Instead, and in order to see off a potential Tory rebellion, the Chancellor announced a fighting fund of £435m to help soften the blow. This will include a £300m discretionary fund to be shared out by councils to businesses least able to take the rates hit.
Hammond also pledged that no business losing its small business rate relief would see it rates bill increase by more than £50 a month.
But the directors of many smaller estate agency businesses may be less happy with Philip Hammond.
He said during his speech that he intended to close the tax benefits gap between those who are directors of companies and those in employment, and has cut the tax-free dividend allowance business owners enjoy in half from £5,000 to £2,000 from April next year onwards.
Initial industry reaction
“Today’s Budget marks another missed opportunity to create fundamental reform to the UK’s long-suffering property market,” says Paul Smith, CEO of Haart.
“The Housing Minister merry-go-round has left housing issues at the periphery of government thinking and strategy. Continually kept at an arm’s length, they’re incapable of tackling the deeper seated issues within housing market – leading to a plethora of initiatives that that tamper with rather than tactically reform the market.”
Fraser & Co.
“The industry will be disappointed that another opportunity to reform Stamp Duty has been overlooked by the Government,” says Robert Fraser, MD of Fraser & Co.
“The impact of this counter-productive tax arrangement is being felt at every level of the market, from international investors, to downsizers and first time buyers, where prices at the higher end are faltering and competition at the lower end of the market is intensified.
“Transaction volumes have remained strong and steady, but it is no secret that they are not reaching the level they could be. We are living in an unpredictable period in which the London property market needs to be attractive from both a domestic and international perspective, ensuring that conditions are created for the industry to thrive.”
“The real underlying issue in the housing market is affordably priced homes. The recent Housing White Paper proposed more starter homes for first time buyers, we were keen to hear more on how and when these homes will come to fruition,” says Glynis Frew, Chief Executive of Hunters Property Plc.
“The White Paper also discussed releasing land to build on, which again is fundamental to helping the housing market. When demand is high and supply is low due to lack of building this drives prices up. It would also have been beneficial for the Chancellor to expand on this.”
IMS Independent Property Solutions
“I wasn’t expecting many rabbits from the hat of today’s Budget but it would have been great to see the Chancellor focus more on helping Britain’s housing market,” says Michelle Niziol, Director of IMS Independent Property Solutions.
“The Chancellor should have used today’s Budget to announce new measures to speed up house building and cut planning red tape, as well as announce changes to the Stamp Duty tax system.
“The lower threshold should be increased to become better aligned with today’s average house price as this would help stimulate more movement at the bottom of the house market. The Government should also look to move the cost of this property tax from the buyer to the seller.”
Heaton & Partners
“I cannot believe that there wasn’t even a mention of housing in today’s Budget,” says Edward Heaton, founder and managing partner of property buying and search agent Heaton & Partners.
“I would have loved to see the Chancellor get rid of the 3 per cent surcharge for second homes and reduce the overall stamp duty rate for high end properties by making it a flat rate today, but sadly I think this is a pipe dream of those operating in the prime market, who are witnessing it being stifled by stamp duty. What the Chancellor doesn’t seem to realise is the profound effect that it is having on the rest of the market.”
“In particular, it was disappointing to not see a U-turn on the catastrophic decision the Chancellor made in the Autumn to ban lettings agent fees,” says James David, CEO of online letting agent Upad.
“As predicted, rising rents are already on the cards for long suffering tenants with renting now a necessity, as home ownership is out of reach for most Millennials.”