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Property market largely overlooked as Mortgage, Property and Legal experts share their reaction to Autumn Statement

by | Nov 22, 2023

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As Chancellor Hunt reveals plans for the economy, for businesses and for consumers, mortgage and property professionals have been sharing their reaction to the Government’s new policy plans, with many disappointed that rumours of changes to Stamp Duty or other support measures for the housing market did not come to fruition today.

With expectations having widely circulated beforehand about cuts to taxes and national insurance as well as rumours about Stamp Duty, Chancellor Jeremy Hunt has been on his feet in the Chamber. The rabbit out of the hat moment was a 2% cut in employee NICs from January.

But what do today’s measures mean for the UK housing market which has been under such pressure since the Kwarteng/Truss debacle in 2022. On the face of it, there doesn’t seem to be much for property professionals to get excited about.

Mortgage, Property and Legal experts have been sharing their reaction to today’s Autumn Statement announcements as follows:

 
 

Rachael Sinclair, Director of Mortgages and Financial Wellbeing at Nationwide Building Society said: “We welcome all measures that can play a role in helping people buy their first property, including the Mortgage Guarantee Scheme extension but we are disappointed that it continues to restrict qualifying loans to 4.5 times income as research shows that most homes remain unaffordable through the scheme. Owning a home remains an aspiration for many, which is why as a leading lender to first-time buyers, Nationwide has continually offered products to those with small deposits outside of the Mortgage Guarantee Scheme including our Helping Hand range which lends up to 95% LTV and up to 5.5 times income.

“However, more needs to be done. That is why we continue to call on the government to commission an independent review into the first-time buyer market. This will provide much-needed clarity on issues that continue to hamper prospective homebuyers, such as the lack of new homes and the need for products that address the equally significant barriers of deposit and affordability.”

Jonathan Stinton, Head of Intermediary Relationships at Coventry Building Society, said: “We hoped today would be the day, but it looks like we’ll be waiting until at least March for the long-awaited Stamp Duty announcement. It’s clear that one way or another Stamp Duty changes are on the horizon – the Chancellor can either orchestrate the change through a considered reform, or he can ignore it and let the temporary relief lapse. Let’s hope it’s not the latter, because that choice would see homebuyers paying an extra £2,500 on an average priced home, come March 2025.

 

Sam Mitchell, CEO of Purplebricks said: By failing to cut stamp duty and cut it permanently, the Government has missed an opportunity to set the already fragile housing market on a clear path to recovery. Rumours will now grow that we will see a cut in the spring, meaning decisions on buying and selling will be delayed and the economy will suffer. This has already been a difficult year for the property sector, and the lack of support will threaten a recovery in 2024. Despite this, the silver lining is the confirmation of the extension to the mortgage guarantee scheme. Not only does this support the green shoots we are already seeing in the lending market, but is great news for first time buyers, especially if coupled with the declining rates we are seeing in the market.”

Gareth Davies, head of business development in commercial lending at Hodge, commented: “It’s great to hear of additional investment in the property market today, not only enabling local authorities to deliver thousands of much needed homes, but also plans to “bust the planning backlog.

“The Chancellor has announced changes to the planning system, a new payment and refund system to get local authorities to speed up planning applications for major business developments, investment in high quality nutrient mitigation schemes as well as changes to permitted development rights when converting a single dwelling into two homes.

“Planning reforms are needed to help fuel the construction sector and to encourage further development and investment in our property market. We need these reforms, not only to help build more homes – which as we know are very much needed in the UK – but also to make better use of hundreds of buildings that lie empty around the UK, which can hopefully be developed more quickly thanks to these reforms.

“These reforms are just a drop in the ocean of what’s needed overall to rekindle the property market, but recognising the difficulties the planning system poses for the housing sector, as well as investing in delivering more homes and working to reduce the backlog in planning applications is a start. We look forward to seeing it in action in the coming months and years.”

Maria Harris, Chair of OPDA, says “There was little in the Autumn Statement that will help the housing market to operate more smoothly or speed up transactions.  Although we will need to look in detail at the 110 growth measures mentioned by the Chancellor.

“While we welcome the measures to speed up planning turnaround times, we need a focus on more than just planning; more important are the times from someone putting in an offer on a home to completion. While any measures to increase the supply of housing is welcome, this just brings more people into a broken housing market.  The Chancellor stated that the UK’s tech sector has grown to become the third largest in the world, this needs to filter through urgently into the tech and digitisation of the home buying and selling process where all key data is held centrally and can be accessed easily and quickly by every relevant party.  These changes can’t come soon enough.” 


Top legal experts at BDB Pitmans and Wedlake Bell comment on stamp duty cuts not being mentioned in the Autumn Statement

John Stephenson, Partner at BDB Pitmans, comments>

“Jeremy Hunt appeared to be sizing up some adjustments to stamp duty but seems to have decided to wait until the Spring Budget – and closer to the next General Election – to make any announcements.

“Hopefully it will be something substantive, as simply adjusting the bands may not really make a long-term difference to buyers, other than injecting some air into the housing market.

“Given that the opposition is currently around 20-points ahead in the polls and has indicated that they are unlikely to change the current levels of stamp duty, and would even consider increasing the rates for certain buyers, it seems unlikely that we will see any actual alteration to stamp duty in the future, at least not until after the General Election.

“The UK has always had a strong propensity toward home ownership over renting – much more than, for example, Europe – and the health of our housing market and the ability for people, especially the young and families, to buy a home, is and will remain an influential factor in people’s opinion of their government.”

Parminder Sidhu, Partner & Head of Residential Property at Wedlake Bell, comments>

“Given the Government focus on inflation-reducing tax-measures it is perhaps not a huge surprise that they decided to eschew any stamp duty amendments in the Autumn Statement, as this would likely have contributed to a fresh level of inflation in the housing market.

“However, it will be a disappointment to many as the move would likely have assisted some first-time buyers or young families looking to move into larger homes, as well as being an attractive proposition for potential overseas buyers at the higher end of the market, which tends to contribute the majority of the SDLT receipts.

“While there may be further announcements on stamp duty to come, either in the Spring Budget or an electoral manifesto, given that we are likely less than a year from another General Election it’s unlikely that any reduction in stamp duty will be realised under this Government, while if a Labour government is to come they may choose to focus on increasing the supply of new homes as a way of bringing down house prices.”

Donna Murray, owner of Greenshoots Financial, outlined several key points in the wake of the Autumn Statement. She said, “The projected economic growth, while modest, is a positive sign for the stability of the mortgage market.” Yet she cautioned that changes to benefits and the introduction of compulsory work experience could impact the financial stability of certain clients, especially those on lower incomes or with inconsistent employment records.

Murray also noted the changes to National Insurance contributions, with the primary rate decreasing to 10% from January 2024. She stated, “This change may provide minimal relief to some of our clients due to ongoing costs, but it is a welcome development nonetheless.” She also mentioned the revisions to national insurance for the self-employed, indicating that it could make homeownership more attainable for this demographic. However, she emphasised the importance of being ready to advise on these modifications and their potential effects on clients’ financial situations.

“Overall, while these developments bring some stability to the mortgage market and homeowners, further stability is still needed. This will ensure that all homeowners, especially those affected by the changes in benefits and work experience requirements, continue to thrive in this market.”

Robert Winfield, MD at Chartwell Funding Ltd. said: There wasn’t a lot in the Autumn Statement to benefit our industry but I’m hoping that the cuts to NI will see an improvement in affordability and our clients can borrow more. There were lots of positives about the state of the economy, growth and inflation etc and I hope this enthuses people to take on a mortgage in 2024.”

Will Hale, CEO at Key said: “The Government’s decision to honour its Triple Lock commitments in full will be a relief for people in receipt of the State Pension. Increases announced are worth up to £900 per year from next April.

“The bigger picture is that of generational fairness and it is undeniable that pensioners have so far been insulated from the economic pressures the country is facing and the pressing need to keep public spending under control.

“Older homeowners need to look to all aspects of their retirement income and the State Pension is an important element of their finances, but they can also look to make more use of their property wealth.

“Increasingly we are seeing growing demand from over-55s with mortgages who are struggling with repayments as fixed rate deals come to an end or who need to refinance interest-only mortgages. Property wealth can play an important role in boosting standards of living in retirement and should be considered as part of an overall retirement income strategy.”

Commenting on the Stamp Duty status quo, Tom Minnikin, partner at Forbes Dawson, said: “Homeowners may be disappointed that there was nothing in today’s Autumn Statement on Stamp Duty Land Tax.

“Signs that the property market has stalled in recent months, due to rising mortgage rates, and fears of a recession, had led many property owners to look to the Government for stimulus. A cut in stamp duty would almost certainly have been top of their wish list.

“Therefore, the decision to keep rates on hold may come as a setback to some”.

Steve Bangs, Chief Executive Officer at Pegasus (later-living specialist), comments on the Chancellor’s Autumn Statement:  “The UK drastically lacks the homes it needs to support each stage of life, so it is positive to see the Chancellor introduce measures today to expedite the cumbersome planning process. In a supply-squeezed market where people are living for longer and the demand for smaller properties has increased, it is crucial that housebuilders in the senior living sector are prioritised to create a sufficient supply of suitable age-specific homes. In the race to build enough homes, the provision of later-living properties that promote choice and flexibility, whether owner-occupation or renting, must sit at the top of the list.”

“However, today’s statement failed to offer the boost to older people that was widely expected, with Inheritance Tax (IHT) reform conspicuously absent. It was an opportunity missed by the Government, failing to address a punitive tax system that has often disproportionately targeted those at one of the most vulnerable times in their lives. A reduction in IHT would allow our older generation to be in the driving seat of their future and have greater ownership over their financial decisions.

“Finally, stamp duty relief for downsizers was another omission from today’s reforms. Each time we look at housing policy within the UK we fail to make the connection between the bottom and top of the ladder, and how providing incentives for last-time buyers can unlock market fluidity for the entire sector. Providing further stamp duty relief for downsizers to help ease the pressure of financial planning would be a move that would not only benefit an older generation that is often characterised as cash poor and equity rich, but would also free up much sought-after family properties for second steppers, that in turn boosts supply for first time buyer properties to help stabilise the market.”

Joe Pepper, CEO of PEXA UK comments ahead of the Government’s Autumn Statement“With no dedicated policies on the horizon to boost property transactions, for homebuyers and homeowners, this Autumn Statement provides little relief.

“Those having to remortgage imminently will most likely be forced to pay far more than they do now, despite mortgage rates beginning to fall. This is only going to exacerbate existing affordability problems. Many buyers will be waiting for fixed rates to become more competitive before progressing purchases, even with lower deposits and a green incentive on offer.

“We remain hopeful that the rate of inflation will continue to fall, so that mortgage rates continue to fall in line, at which point we expect to see property transactions rebound. The current quiet period is the ideal time for the industry to come together and embrace the kind of technological innovation which will significantly improve the markets’ ability to scale and grow capacity in the months to come. This is going be key in transforming the property market, reducing friction and improving customer outcomes.”

Paresh Raja, CEO of Market Financial Solutions, said: “You cannot begrudge the Chancellor’s focus on supporting businesses and consumers with tax reforms, but from the perspective of the property market, it was a somewhat uninspired and unimaginative statement.

“Speeding up the planning process and potentially making it simpler to convert houses into flats will be welcomed by some landlords, investors and developers, but more detail is required. Meanwhile, a more drastic overhaul of the planning system seems to have been abandoned, which feels like an important oversight.

“The lack of meaningful property-related announcements is disappointing, given there had been rumours of stamp duty cuts over the weekend. Today was a real opportunity to breathe life into the market and help catalyse growth at a time when economic markets are gradually improving, but that opportunity was missed.”

John Phillips, CEO of Spicerhaart and Just Mortgages said: “Despite the industry’s long wish list of announcements, it’s safe to say many will feel disappointed by the lack of support for the housing market. After all, this is a key driver in the success of the wider economy. While a two per cent tax cut to the employee national insurance rate may keep more money in people’s pockets and improve income ratios for new mortgages, it doesn’t quite go far enough to address the clear affordability challenges facing homeowners.

“With an election on the horizon and homeownership still a clear aspiration for many, it would have been great to see more support in this area, particularly through a government-backed low deposit scheme or for the likes of Shared Ownership. News of planning reform and measures to increase the number of houses are welcome, although we are still some way off solving the chronic challenge of undersupply.

“Those self-employed brokers will be pleased to see they too feature in the chancellor’s tax cuts, as well as businesses. It’s less good news though for landlords who would have hoped for similar relief, especially as many weigh up their options, skim down their portfolios or sell up entirely. Changes to the local housing allowance will help reduce some of the burden of high rents for the most vulnerable. However, we mustn’t forget the prospect of landlords disposing of rental properties, which has major implications on rental prices. This significantly reduces the opportunity for many renters to realise their ambition and join the property ladder themselves.”

Jatin Ondhia, CEO of Shojin, said: “Housing could not be overlooked today, not after Labour had made such a point of championing housebuilding as a key part of its election campaign. Hunt struck some positive notes, such as plans to make it easier for councils to fast-track applications for infrastructure projects, and potentially making it easier for houses to be converted into flats.

“But overall, this was a lacklustre statement for the property sector, with little of substance to excite those building, buying and investing in UK real estate. In the longer-term, at least, I welcome the decision to adopt the recommendations from Lord Harrington’s foreign direct investment. We must ensure the UK remains a hub for global investments, so any action to incentivise and remove friction from international investors seeking out opportunities in Britain is a step in the right direction, and the real estate sector could be a major beneficiary.”

Adrian Anderson, Director of property finance specialists, Anderson Harris said:

Today’s announcement of cuts to National Insurance by Chancellor Jeremy Hunt in his Autumn Statement will be welcome news for millions, putting hundreds of pounds back in the pockets of employees and those self-employed next year.

Mortgage seekers will be especially pleased as rising interest rates and the cost of living crisis has made the banks’ affordability checks more challenging and any increase in an individual’s net pay will help their mortgage capacity.

This measure, combined with mortgage rate cuts we have seen in recent weeks, will hopefully help ease the pressure on millions of current and future mortgage holders across the country.”

Sebastian Murphy, Group Director at JLM Mortgage Network said:

“This Autumn Statement presented the Government with an opportunity to really move the dial on housing market activity, and to introduce some fresh incentives to get people moving and buying. This was an open goal that the Chancellor appears to have missed spectacularly – we have called for a stamp duty holiday for older homeowners who want to downsize but are put off by the large amount of taxation they would need to pay, but nothing of the kind has been proposed. Such a measure would encourage older, single people to move into more suitable accommodation while freeing up larger, family homes for those who are moving up the ladder and want these types of properties in order to meet the needs of their families. Getting the right people into the right homes would help a large number of people who feel they can’t move at the moment. We need greater levels of supply desperately but a proposal which might allow homes to be split into two flats seems a retrograde measure which doesn’t tackle the types of homes people need or want to buy. There has been a lot of expectation about what might be announced today and this feels like a real damp squib for housing and mortgage market stakeholders.”

Jonathan Pearson, director at Residentially said: “While moves to overhaul planning fees and speed up application processing are a step in the right direction, it’s imperative that we remain focused on the underlying issues within the planning system which have been exacerbating the UK’s housing crisis for some time. Namely, the chronic underfunding which has caused a strain on planning departments due to insufficient resources and unmanageable workloads.

“The Institute for Fiscal Studies thinktank has previously calculated that local authority net spending per person on planning dropped by as much as 59% between 2009-10 and 2020-21, higher than any other service. Meanwhile, much-needed new affordable housing projects are taking as long as two years to go through planning, according to some of the registered providers I work with and the longer they are forced to wait, the less likely they are to keep up with rising construction costs and are at risk of missing funding deadlines, so developments may not even be viable by the time planning permission is granted.

“Reforms like the planning fees overhaul can only work if planning departments are adequately funded and staffed, with professionals that can efficiently process applications and offer valuable guidance to local authorities. Even with the chancellor’s pledge of £32 million to tackle the planning backlog and the introduction of ‘a prompt service or your money back’ policy, this problem of a dearth of experienced planning officers appears unresolved.”

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