Vanessa Hale
Director, Research
The Chancellor of the Exchequer, Rishi Sunak, delivered a Summer Economic Update on 8th July 2020 which included a raft of new measures aimed at kick-starting the economy and creating jobs. For property, an immediate stamp duty holiday was announced (in England and Northern Ireland), alongside a Green Homes Grant and a new policy aimed at helping the decarbonisation of public buildings.
We gather reactions from some of the key people across the Strutt & Parker and BNP Paribas Real Estate businesses, whose sectors of the market will be impacted:
STAMP DUTY HOLIDAY
Vanessa Hale, Head of Insights and Residential Research at BNP Paribas Real Estate:
“The announcement from Rishi Sunak on the immediate raising of the stamp duty threshold to £500,000 for England and Northern Ireland is a boost for all buyers whether first timers, downsizers, second steppers or upsizers - and will help to sustain the momentum that has been achieved since the lockdown on the estate agency industry was lifted in England in mid-May.”
“This measure alone is very welcome, but it is worth considering that the wider economy, potential job losses and mortgage availability will still play a significant role in keeping the housing market moving. Buyers are facing much tighter restrictions on lending which could prove too much of a barrier to help them take advantage of the stamp duty holiday before 31st March 2021, when this temporary tax cut is due to end. However, for those that can get a mortgage, the stamp duty saving will be very attractive and will certainly boost confidence in the shorter term.”
Kate Eales, Head of Regional Agency at Strutt & Parker:
“This stamp duty holiday is the energy shot the market needs. Although the market has been buzzing since it reopened in May due to pent up demand, we were expecting the autumn market to get a lot more challenging and were concerned we would see transaction levels tapering off again. This tax cut has the feel good factor and will galvanise people to make decisions more quickly, and not wait until next spring to put their home on the market. It should also mitigate the risk of house prices softening towards the end of next year.”
“Much has been said about the impact on First Time Buyers and the savings they will make, providing they have a large enough deposit to buy in the first place. But there are actually larger savings to be made at the higher end of the market. For anyone buying a property over £500,000, they will now save in the region of £15,000 in tax. We are already seeing high transaction levels and lots of interest in affluent regions of the UK like the Cotswolds, higher than we have seen for two years and this may only do more to stoke up activity in places that are already in a bit of a bubble.”
“It is unfortunate that the stamp duty break will only apply to homebuyers in England and Northern Ireland, and not Scotland and Wales where we also operate. This may well have a negative impact on demand in these parts of the UK.”
Charlotte Moxon, Head of Regional New Homes at Strutt & Parker:
“The stamp duty holiday is a really positive move by the Government to get the property market moving, and we will see a vast number of our buyers benefitting in the new homes sector. Buyers are able to use the scheme to buy a new build home up the value of £500k without having to find any money to pay stamp duty. Together with the Help to Buy scheme, which enables buyers who do not own another home to purchase up to £600,000 with only a 5% deposit, this will put a new home within the reach of many more hopeful homebuyers. It won’t just help young professionals to buy starter flats; in many areas of the country this could help a family to buy a three or four bedroom detached family home. It will also help stimulate the top end of the market. We currently have a number of new build properties in the £1-2 million bracket which have been generating interest but not receiving offers because prospective buyers are in a chain. Once the bottom part of the market gets moving, the rest of the market will accelerate.
“This tax cut will also help to assist the housebuilding industry as whole. Developers are often asked to pay a buyer’s stamp duty as an incentive – this means that more offers will be at an acceptable level for developers. Fantastic news all round.”
PLANNING REFORM, THE AFFORDABLE HOMES PROGRAMME & DECARBONISATION OF PUBLIC SECTOR BUILDINGS
Anthony Lee, Head of UK Development Consultancy at BNP Paribas Real Estate:
“The Government has announced that new planning legislation will be published in July 2020 and that it will launch a policy paper setting out comprehensive reforms of the planning system. Planning reform has been a recurring theme over the recent past but the Government needs to address other supply-side measures to boost house building as a priority. We need a greater focus on building capacity and skills in the industry to give developers access to the staff they need to build out the planning permissions that are yet to be implemented. There needs to be a joined-up approach. Planning reforms aimed at increasing the amount of housing that can be built could be severely undermined by the proposed controls on immigration which could deny developers access to the construction workers they need in order to build.”
“The Affordable Homes Programme of £12.2 billion to build 180,000 new affordable homes remains below levels provided by previous governments and will be insufficient to protect affordable housing delivery in a falling market. This comes at a time when the need for affordable housing will grow significantly as a result of lower incomes as companies move more staff to part time and casual working when the Furlough schemes ends. Construction of new affordable housing can pay a key role in the recovery but grant levels may need to increase to prevent many consented schemes from stalling.”
“On decarbonisation, Britain has the oldest housing stock in Europe and retrofitting these homes to reduce carbon emissions will be costly. 64% of the 2.5 million homes owned by housing associations were built before 1980, amounting to around 1.6 million homes. The government’s £1 billion fund for decarbonisation (only part of which will be invested in social housing with much of it being used also in schools and hospitals) appears to be only a fraction of the amount actually required to make meaningful inroads into reducing carbon emissions from social housing.”
GREEN HOMES GRANT
Vanessa Hale, Head of Insights and Residential Research at BNP Paribas Real Estate:
“The COVID-19 lockdown has made many of us want to commit to a greener future and living more sustainably. Dramatic falls in air pollution in cities across the world are one of the few positives that have come out of the pandemic.
"The new Green Homes Grant introduced by the Government today will make green home improvements, such as solar panels and insulation, far more accessible to those on low and middle incomes across the UK, which can only be celebrated. We need to act quickly when it comes to Climate Change and this shows the Government is committed to hitting our target for net zero greenhouse gas emissions by 2050.”
“With so many more of us working from home on a regular basis – our electricity, heating and water bills are going up due to us being at home for much longer periods of time than we have in the past. Reducing the running costs of our homes will be at the forefront of people’s minds, particularly as we head into the winter months.”
“As reported in our Housing Futures research, back in 2008, a London policy to encourage living roofs and living walls across the capital had a transformative effect on London’s roof scape. These measures may well have a similar effect in painting the towns green, and we could see a big increase in solar panels across the roofs of the nation.”