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Evelyn Paris on
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Between the political points scoring and cough
sweet jokes, there were some noteworthy details for taxpayers during the Autumn
Budget - as it was revealed that the personal allowance on income will rise
from £11,500 to £11,850. Equally, there was bad news for diesel car motorists,
as an excise duty on certain types of new diesel cars will go up by one band.
These announcements were mere caveats it what
has become to be known as the ‘housing budget’. Consultation on long term
tenancies, taxes on second property owners and the abolishment of stamp duty laid
out a clear roadmap to help a stifled housing market.
The Intention
As the dust settled over the course of the week,
the real point of debate has been the abolishment of stamp duty and land tax
for first time buyers. No longer will purchases of up to £300,000 outside of
London or on the first £300,000 of a property’s value inside London (up to a
total property value of £500,000) attract stamp duty.
Experts in the
housing market continue to reiterate, first time buyers are the lifeblood of
the property market and anything to stimulate their ability to buy tends to
create a knock-on effect causing further, wider activity in the housing market.
Such as homeowners who were previously debating
about upgrading to a bigger property will see this as the perfect opportunity
to list. This thought process is likely to result in a spike in supply across
the country, particularly in areas where substantial houses are still valued
below £300,000.
The Risk
Yet
the fear is that the move to help get these young buyers on to the property
ladder could backfire by in fact pushing up house prices.
The
main issue is house supply in key areas. As discussed, the abolishment is
likely to cause spikes in supply, however many areas are still grossly
undersupplied which has kept housing values at a record high. With an increase
in the demand at entry level there is likely to be more competition for
desirable properties on the market in the short term.
Equally,
those same homeowners who are considering a move to a bigger property, will be
acutely aware that first-time buyers will have additional resources and attempt
to pass on their own stamp duty costs. This is especially true in London and
the South of England, who would stand to save the most from the abolishment but
find it difficult to get well maintained properties in desirable areas for less
than £500,000.
There remains a lot of uncertainty in the market, particularly depending on which regional and economical areas you live.
For those who have the good fortune to live in areas with a good amount of available properties under the £300,000 barrier, the indications are that some modest savings will be possible without the undue stress over excessive levels of competition.
Contrasting, those in highly desirable areas the path is a little more complicated.
Surges in demand and house prices are likely to continue to push first time buyers out of the market. Whilst current homeowners who are keen to remain in the same area are likely to to turn to design and build companies to maximise the property they currently own. Loft and basement conversions have also seen significant growth during the recent bout of low levels of interest rates and soaring house prices – and show no sign of slowing down.
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