The euphoria caused by the stamp duty cuts announced just before the weekend has given way to a realisation that they do nothing to help improve supply in the private rental sector.
The mini-Budget raised the threshold before stamp duty is paid to £250,000 and for first-time buyers to £425,000 – welcomed by most agents but not without concerns that this may lead to further overheating of house prices.
James Hyman, head of residential at lettings and sales agency Cluttons, says: “It is disappointing that the Chancellor has done nothing to encourage private landlords back to the market. What would really help the UK’s current housing crisis is a reduction of the three per cent levy on second home purchases and reintroduction of tax relief for landlords especially on improvements to their properties.
“The main reason why rents have escalated so quickly over the last two years has been lack of supply, which has been driven by so many landlords being forced to exit the market due to the government no longer making it viable to be a private landlord.”
Jonathan Rolande of the National Association of Property Buyers says the initiative could backfire. The new threshold of £250k truly reflects price rises and property inflation we are seeing at present in the market. But, on the downside, there was a lack of detail on how housing supply will be increased. That is worrying. The government has fired a starting gun designed to encourage a frenzy of first time buyers to try and get on the housing ladder.”
Samuel Mather-Holgate of the Mather & Murray Financial advisory firm, comments: “No one likes stamp duty, but I would have preferred to have seen a cancellation of the draconian additional property surcharge. However, Friday’s announcement will almost certainly stimulate a housing market that was due to dry up.”
Nathan Emerson, chief executive of agents’ trade body Propertymark, comments: “The rebalancing of the thresholds for which stamp duty is paid, in particular for first time buyers is long overdue to catch up with house prices which have risen at an extraordinary rate. We did hope that stamp duty for downsizers or last time movers would have also been reviewed to release the latter part of the market, which when blocked stops movement further down for second steppers and first-time buyers, causing stagnation as buyers have nothing to move on to.”
Although unsympathetic to landlords and letting agents alike, the campaigning charity Shelter is also critical of the Budget’s effects on the private rental sector.
Chief executive Polly Neate says: “The real growth this government should be ready for is a growth in homelessness. The Chancellor has done nothing to help the 2.5 million private renters who are already behind or constantly struggling to pay their rent. Cutting stamp duty won’t protect those at risk of losing their homes, but it will push up house prices.
“Every day our helpline advisers answer calls from families on the brink of losing their home as they can no longer keep up with runaway rents or afford to eat. This mini budget is not going to ease the terror families feel, with the Chancellor leaving housing benefit frozen at 2020 levels. The government has missed its shot to prevent a rapid rise in homelessness. To keep people at the sharpest end of this crisis in their homes, housing benefit must be unfrozen now. Allowing homelessness to rise will cost the economy more and ruin countless lives.”
