Last month I looked at some of the possible housing and mortgage market-related measures George Osborne might look to announce in his Autumn Statement and it would seem that he delivered in some areas, and left others untouched.
The major omission was clearly Stamp Duty Land Tax which has not even been tinkered with, let alone fundamentally reformed. This is obviously disappointing and while one can understand that a tax which has brought in over £1 billion more than it was meant to this year may not be top of the priority list for the Treasury there is still a great need to change an antiquated system which could be of even greater benefit for UK plc. That said, we are now only a few months from next year’s Budget and Osborne might look at the system then perhaps with another first-time buyer stamp duty holiday which might last up until the 2015 May General Election.
Putting that to the side, it was positive to see the Chancellor announce a further £1 billion of loans to ‘unlock’ housing projects across the country which are currently sat in ‘development hell’. After the Credit Crunch a huge number of housing projects were shelved as finance ran out and there is good reason to focus on these developments which might be relatively easy to resurrect. I’m sure the availability of this money will help add to the increased supply of housing this country so desperately needs.
Other measures may well (perhaps inadvertently) bring homes to market particularly the decision to halve CGT relief from 36 months to 18 in April next year for those who own a property but no longer live there. Add in the decision to make foreign nationals pay CGT from April 2015 for any homes they sell in the UK and we could see a number of individuals in this position opting to sell rather than hang around to pay the tax.
So, while Osborne skirted around the major property market issues there has been some tinkering and we can certainly see an ongoing focus on housing and mortgage availability has not been tempered. Of course we await the formal kick-off for Help to Buy 2 at the start of next year and, while a small number of new lenders have either committed to join and/or released products, perhaps the real success of the Scheme has been the fact it’s opened up the high LTV market to greater competition.
While some of the Help to Buy lenders have issued products in this range it has actually been those outside the scheme, either doing it entirely alone or using private insurance guarantees, which have taken the bull by the horns. Indeed, many of the smaller building societies who have operated in this space for some time have not simply ceded ground to the Help to Buy entrants but instead have decided to commit strongly with market-leading products. One suspects they will continue to do this particularly as we have yet to see any Help to Buy products offered for remortgagors yet, although Aldermore have committed to do this.
All in all, with 2013 drawing to an end, we appear to be standing on the brink of a market which has renewed confidence and optimism. What a difference a year makes. Gross lending predictions appear to be starting at £195 billion-plus and it is anticipated that purchase transaction levels will continue to break past the million mark. Which is clearly positive news and makes 2014 a year to look forward to – as long as we can match supply to demand whilst ensuring responsible lending is still at the forefront of our market then I’m sure that all stakeholders can not only look forward to a particularly festive holiday season but a very prosperous new year. I wish you both and look forward to catching up with you all in January.
Richard Adams is managing director of Stonebridge Group