Stamp duty reform is top of the industry’s Autumn Budget wish list, alongside finer details of the new first-time buyer scheme announced last month.
Further details of the new first-time buyer scheme are expected to be released next Wednesday. So far, we have been told the new scheme will help borrowers get onto the ladder with a deposit of 2.5%.
Borrowers will take out a mortgage of up to 95% loan-to-value, however the minimum deposit required is even smaller under the new plan at 2.5% compared to 5% under Help to Buy.
While the scheme received an overall positive reaction from the mortgage industry, players within the market were keen to know the finer details.
Quilter financial adviser Ian Futcher says: “The mortgage market needs a budget that creates the conditions for sustainable growth, and a good place to start would be greater clarity on the support being developed for first-time buyers.”
“We would like to see the government provide more detail on how Your First Home will work in practice, alongside the shape of the proposed First Time Buyer ISA. Both have the potential to bolster younger people’s ability to build a deposit and get onto the housing ladder, but their effectiveness will ultimately depend on the detail.”
“For Your First Home that includes eligibility and property price limits, while the bonus, contribution limit and property price cap will be crucial to determining how useful the new ISA is for prospective buyers.”
Futcher explains: “Helping more first-time buyers into homeownership should also have benefits beyond that part of the market. A healthier flow of new buyers can support transaction levels and give existing homeowners greater opportunity to move up the property ladder, helping to create more activity across the housing market.”
However, he highlights that demand-side support cannot work in isolation. He adds: “It needs to be accompanied by a serious focus on increasing housing supply and maintaining economic stability.”
“Mortgage pricing remains heavily influenced by expectations for inflation, interest rates and government borrowing, so a budget that unsettles markets could quickly undermine measures designed to help buyers.”
“Sustainable mortgage growth requires more people able to buy their first home, more existing homeowners confident enough to move and enough homes available to meet that demand. The budget has an opportunity to make progress on all three.”
Get the market moving
Meanwhile, TAB founder and chief executive Duncan Kreeger calls for “action on the housing crisis”.
Kreeger says: “This is the worst I have seen the property market in 20 years: no one wants to sell; no one wants to buy; something’s got to give.”
“If Healey can’t find money to plough into housing, he should reform planning. If the cabinet doesn’t have the political appetite to help private developers hit housing targets, he should follow in the footsteps of Norman Lamont, Alistair Darling and Rishi Sunak and introduce a stamp duty holiday. That would be a catalyst to get people moving – the existing housing stock would be used more efficiently as a result.”
Kreeger says Healey “could deregulate the private rented sector”, which he suggests “would get property investors buying again”.
He explains: “No one wants to be a landlord at the moment. Potential first-time buyers might benefit from lower rents if the supply of rental property stopped shrinking.”
“At the very least, Healey should scrap the planned Mansion Tax announced at the 2025 budget. The last thing we need is another disincentive to move.”
Kreeger says he wants to see “significant announcements”.
He adds: “Andy Burnham’s pitch was radical. He was going to shake things up, he was elected on a platform of saying Britain is in crisis and that he was going to rewire the entire system of government. Burnham and Healey need to sink their teeth into the really big decisions. The budget is the time to expect the biggest fiscal decisions to be made.”
Another demanding stamp duty reform is Trinity Financial product and communications director Aaron Strutt. He says the property market has been “crying out for stamp duty reform and ideally incentives for older people to downsize so there are more homes available on the market”.
Strutt explains: “This is important because so many older people live alone and in large houses, but many of them are not willing to move because they don’t want to pay the taxes involved. We clearly need more economic stability and incentives for people to move on or up the property ladder.”
Also weighing in, John Charcol mortgage technical manager Nick Mendes believes stamp duty should be top of the chancellor’s list.
He says this should be done by either “abolishing it altogether or introducing targeted relief for those looking to downsize”.
Mendes adds: “Many older homeowners are sitting in properties larger than they need but are put off moving by the cost of stamp duty, and supporting them to downsize would free up family homes and create movement further down the chain, stimulating activity across the whole property market.”
Capital gains tax
Chancellor John Healy has also already reportedly ruled out any increases to capital gains tax (CGT).
The decision could spare some landlords more than £15,600 in additional tax when selling an investment property, according to analysis from The Letting Partnership.
The Letting Partnership chief operating officer Chris Mason says: “The chancellor’s decision not to pursue an increase in CGT will come as a welcome relief to landlords, particularly those who have seen the value of their investment properties increase substantially over the last decade.
“However, while this particular threat appears to have been taken off the table, the wider challenges facing the private rented sector remain.
“The government must recognise that it is the cumulative impact of these changes that risks undermining landlord confidence.”
