Commenting ahead of Rachel Reeves’ Budget, Wavensmere Homes managing director James Dickens argues that despite the welcome positivity about planning reform and boosting the housing market, businesses and property landlords are fearing the worst.

“The feared significant hike in Capital Gains Tax – to bring it more in line with Income Tax thresholds – is likely to be applied to the sale of shares and businesses, but mercifully not second homes or buy to lets.

“The number of homes up for sale last month that had previously been available to rent hit a record high of 18%, in response to alarms of an increasingly aggressive tax environment being imposed by Labour. Having far fewer rental properties – when the demand is so high – could have caused yet another housing headache for both the government and tomorrow’s prospective homeowners.”

Dickens adds that Angela Rayner’s ‘£1bn council housing revolution’ could play into the hands of the increasingly powerful land-rich PLC housebuilders. While planning and pre-construction issues could continue to negatively affect the supply of new homes, with as few as 135,000 to be built this year.

New home targets

“Constructing 300,000 new homes per year is a pipedream! The Deputy Prime Minister should be finding ways to assist housebuilders with delivering the Future Homes Standard and Biodiversity Net Gain legislation, to counteract the cost burden being passed onto the consumer.”

He added: “The only real help first time buyers currently have to access the housing ladder is the Stamp Duty exemption for homes valued up to £425,000, but this temporary threshold change will end in March 2025.

“The much-needed welcome news is that UK inflation fell to 1.7% last month. This must be followed at the November MPC meeting with a meaningful Base Rate cut to stimulate the economy and reduce the cost of servicing a mortgage. A quarter point drop won’t do enough to provide the market visibility and confidence that is required across all industries.”

OSB group intermediary director Adrian Moloney says its crucial to acknowledge the potential unintended consequences of any tax decisions – especially around Capital Gains Tax and National Insurance for businesses and employees.

“It has been suggested that the rate of capital gains tax on the sales of second homes and buy to let properties will remain untouched, but we won’t know until 30 October, whether this is based on fact or speculation.”

Budget clarity

He added: “We’re remaining positive in our outlook as we know that the housing market is extremely resilient. From what I am hearing from brokers, they are busy especially on the ‘business as usual’ side of the market. While there will be some who have stalled their decisions until there is more clarity around the Budget, there are plenty of positive signs that the industry is once again adapting to market fluctuations.”

So, will a more favourable budget stimulate activity? “Ultimately, time will tell,” Moloney says, “ but the signs suggest the market is on track for a stronger finish to the year and into 2025. As rates have become more competitive and lenders compete for the best deals, borrowers should benefit from increased choices. We will be keeping a close eye on the Chancellor’s announcements the day before Halloween.”

Review of LISA 

OneFamily chief executive Jim Islam argues that LISA changes are urgently needed to kick-start the first-time buyers’ market.  “Young adults are facing high rents and soaring property prices, so the government must give them a leg-up in the Autumn Budget.

“The lifetime ISA (LISA) is a superb investment account that could be the solution.  It helps young people to grow their savings and get onto the housing ladder, and they can earn a bonus of up to £1,000 a year.

“But if they have to dip into their nest-egg in an emergency then account holders are hit with a hefty penalty of 25%.  They don’t just lose the bonus, but also a sizeable chunk of their hard-earned savings – and our customers tell us that this puts them off LISAs.

“It would be fairer to reduce the penalty to 20%, so they only lose the bonus that they’ve accrued.”

He added that the outdated LISA house price cap needed to be reviewed too. “It was set in 2017 and house prices have risen massively in the last seven years.  The price cap works against those who have no choice but to live in a location where homes cost more.

“By updating the LISA, it could become an essential tool in helping the next generation to move out of rented accommodation and into the stability of their own homes.”