Chestertons agents presents Budget 2020 wishlist
Guy Gittins, managing director of Chestertons agents, discusses the Budget 2020 wishlist ahead of the new Chancellor’s first budget on Wednesday.
In his and the new government’s first Budget, newly appointed Chancellor Rishi Sunak will want to send a positive message to the country and provide a stimulus for economic growth and investment.
It is likely that proposed spending plans in key areas such as health, education, infrastructure and policing will leave little in the kitty for the housing market however, we would ask the Chancellor to consider the following key points:
Sales market
Stamp duty
The higher rates of stamp duty are still making some buyers think twice about moving.
This is hurting the market by reducing transaction numbers and the Treasury is also now suffering: receipts between April 2019 and January 2020 were 4.1% lower than in the same period in 2018-19, equating to a loss of £282m.
We would like to see a reduction in the top rate of stamp duty and a raising of the tax-exempt threshold as put forward by Boris Johnson during his campaign for the Prime Ministership to encourage more activity in the market.
We would also like to see SDLT rates revised to reflect regional differences in pricing. It is hardly fair that, for example, a 4-bed house in the Midlands and the North not only costs less than a comparable property in London and the South East, but also attracts less SDLT.
Stamp duty surcharge for non-residents
Now that we are leaving the EU, the country will need to work even harder to encourage foreign investment.
With this in mind, the Chancellor should drop the proposed stamp duty surcharge on the purchase of residential property by non-residents which is currently being consulted upon by the government.
This would send a positive message to foreign investors at a critical time for the UK.
Help to Buy
Help to Buy has been extended to run until April 2023, however after April 2021 it will only be eligible to first-time buyers (FTBs).
The Chancellor should make eligibility only available to FTBs with immediate effect as the original primary aim was to help FTBs onto the housing ladder – not to assist existing homeowners to upsize.
Council Tax
The council tax system in England is in desperate need of reviewing as it still based on 1991 values which bear no resemblance to current market values.
Private rented sector
Tax relief
The private rental sector has expanded from 12% of UK households in 2006 to 20% in 2017 (and from 19% to 29% in London).
The phasing out of tax relief for BTL landlords is having a major impact on both supply and pricing in the private rental market.
In response to the effective increase in tax, landlords have responded by either selling properties or stopping buying new properties – thereby reducing supply and raising rents which is adding to affordability issues for tenants.
The Chancellor should re-instate the tax allowance on finance related costs – if not at 100%, then at least at 50% – to encourage landlords to remain within the market.
Section 21 Notices
We have serious reservations concerning the proposed repealing of Assured Shorthold Tenancies (ASTs) which, if implemented would mean that “no-fault” eviction notices under Section 21 of the Housing Act 1988 would no longer be permitted.
The changes would make the length of all tenancies uncertain and many landlords would dispose of their properties or leave them to sit empty, rather than have to commit to potentially indefinite tenancies.
This could lead to a huge decline in the number of available rental properties, which would have a catastrophic effect on those most in need of housing.
Instead, we have asked the government to consider introducing mandatory longer term tenancies, which would achieve the desired aim to provide security for tenants, enabling them to ‘put down roots’, but also allow landlords to maintain a satisfactory level of control over their rental properties.
Right-to-rent
We would like to see the responsibility for Right-to-Rents checks – the cost of which is also passed on to tenants in the form of higher rent – removed from landlords and their managing agents and handed over to the Home Office.
Other
Housing supply
The government has spoken and written at length about fixing the UK’s “broken” housing market yet the supply of new homes, both for sale and to rent, is still way below target rates.
According to the National Housebuilding Council (NHBC), new home completions in London fell by 7% to just 17,500 in 2019, compared to the London Plan’s annual completions target of 66,000 per annum.
We think it is time for the public sector to become more widely involved as stakeholders in the development of new homes.
One possible avenue could be to supply land (but retain ownership) in return for a profit share from the developer which would have the following benefits:
- Developers will get improved access to land
- As owners of the land, the public sector should be able to fast track developments through planning
- The public sector should benefit from a healthy return over time and it will still own the land which will also have appreciated in value over time
Ground rents
The practice of escalating ground rents has resulted in unnecessary increased costs for lessees and has made many properties much more difficult to sell.
We would like to see ground rents (which should only be peppercorn at worst) abolished on all leasehold properties – this to be applied not just to new leasehold contracts but also retrospectively to existing contracts.
Regulation of estate agents
We support proposals to regulate the estate agency sector via the compulsory licensing of all estate agents.
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