Autumn Statement: Full reaction

Autumn Statement: Full reaction

George Osborne’s Autumn Statement, in which he announced his intention to build 400,000 new homes, was given a qualified welcome, with many professions from builders to estate agents to surveyors expressing doubts that it could be accomplished.

The more surprising move was the previously unannounced move to add 3% on top of existing stamp duty charges for those buying second home and buy-to-let (BTL) properties.

The increase won’t affect all landlords, with those who own 15 or more properties being exempt, according to a Treasury spokesperson

Doug Crawford, CEO of conveyancing firm My Home Move, warned it could distort and alter the market both in the short and long term.

Doug Crawford said: “The stamp duty changes will turbo-charge the housing market over the next four months as buy-to-let landlords and holiday home buyers race to beat the deadline before the changes bite in April. This will inevitably push up property prices in the short term, especially in locations popular with buy-to-let investors, such as London.

“However, this measure will change the economics for investors in the long-term. Currently the buy-to-let market accounts for 14% of property transactions annually and we wouldn’t be surprised to see this figure fall over the second half of 2016.”

David Cox of the Association of Residential Letting Agents (ARLA) warned the move will push rents up, saying: “The news in today’s Autumn Statement that the Chancellor will increase stamp duty tax on buy-to-let properties by 3% in April 2016 is catastrophic news for the private rental sector, especially following the recent changes to mortgage interest tax relief and the annual wear and tear allowance. Increasing tax for landlords will increase rents and reduce property standards for tenants.

“To make owning a BTL property financially viable, landlords will need to pass on the increased stamp-duty costs to tenants, who will in turn see less spent on maintaining their property and of course see increased rents. The changes will also deter new landlords from entering the market, pushing the gap between dwindling supply of available property and growing demand even further apart.”

The Chancellor announced a fund of around £7 billion to accomplish his dream of 400,000 new homes built; half will be “starter homes”. Some will be provided at discount rents for five years to enable renters to save deposits, and 8,000 will be supported living.

80,000 of those homes will be built by Persimmon. Jeff Fairburn, Persimmon’s group Chief Executive, said: “Home ownership continues to be an aspiration for the majority of British people and these latest initiatives announced yesterday by the Chancellor should help that dream become a reality for many more people.

“Persimmon prides itself on building homes that people can afford to buy in quality locations. Most of our buyers are looking to stay in their local area and this is exactly what we deliver.”

However some expressed scepticism. Mark Hayward, Managing Director of the National Association of Estate Agents (NAEA) says: “We must applaud any – and all – initiatives to increase housing supply, however, what we need is next day delivery, not the promise of a cheque in the post.

“The announcement continues to talk about the ‘why’ and the ‘when’ but we simply don’t have the ‘how’ and the ‘where’. The house building industry is desperately short of human resource and if we are to get Britain building the number of new houses required, we need to address this problem to create actual homes and not aspirational targets”

Richard Sexton, Director of e.surv chartered surveyors warned there could be significant obstacles in the way of such a quantity of new homes even outside of land and planning, saying: “Reversing the housing deficit will be no easy task – with widely-affordable homes still a pipedream for many parts of the country. First-time buyers have felt the chill for far too long.

“A surveyor capacity challenge may also limit any lending rally. The industry is in need of rejuvenation, and is still suffering from an exodus of valuers during the recession. A shortage poses one potential threat, and could slow the homebuying process for buyers if the market picks up speed.

“But before we even get to that stage, we are already struggling to find the housebuilders needed to erect enough new homes. Mr Osborne can promise more houses, but he still needs to deliver the raw materials and skills to make them happen.”

Brian Berry of the Federation of Master Housebuilders warned there may simply not be enough boots on the ground to build that number of properties, with the Chancellor also announcing an Apprenticeship Levy.

Brian Berry said: “‘George the Builder’ will need a new generation of ‘real’ builders to make his vision for housing a reality. We’re already seeing housing developments starting to stall because the cost of hiring skilled tradespeople is threatening to make some sites simply unviable.

“Unless we see a massive uplift in apprenticeship training in our industry, there won’t be enough pairs of hands to deliver more housing on this scale. That’s why we’re keen for the Government to tread carefully when applying the new proposed Apprenticeship Levy to the construction industry.

“The last time we built in excess of 200,000 homes in one year was in the late 1980s when two-thirds of all homes were built by small developers. SME house builders now only build little over one quarter of all new homes which points to another serious capacity issue.”

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