By Andrew Batt:
Yesterday’s UK budget statement, and its measures to boost the property sector, has been warmly welcomed by many in the industry.
Chancellor George Osbourne (pictured) announced a £130 billion plan to guarantee low cost mortgages through a scheme that will start at the beginning of 2014 and last three years. More than half a million Brits are expected to be eligible.
The new-buy scheme will allow anyone with a five percent deposit to get an extra 20 percent in Government support – interest free for five years. It provides homeowners who have seen their equity shrink during the housing market fall to take what they have left and move up the property ladder.
Some media commentators in the UK are suggesting that Osbourne is putting his faith in the property sector to lead the economic recovery.
Simon Rubinsohn, RICS Chief Economist, said: "The range of measures announced under the ‘Help to Buy’ scheme to kick start the housing market are much needed. Helping those who can’t afford large deposits by using the Government’s balance sheet to guarantee mortgages and using capital savings to offer shared equity loans on new build for all buyers will help prevent prolonged market stagnation – although it presents a significant risk to Government. The devil will be in the detail about how the Government will treat buy-to-let and those in negative equity.”
Property developers were generally welcoming of the measures.
Mark Clare, Group Chief Executive of Barratt Developments, said: “This is a major boost for home buyers and house builders. Over the last five years high deposits and limited availability of finance have combined to lock many people out of the housing market. This is an important step towards addressing these issues and meeting the housing needs of the nation.”
Richard Werth, Chief Executive of Banner Homes Group, added: “The budget has been one to help boost home ownership and enable first time buyers to return to the housing market. These very beneficial measures should help ensure that a generation of would be homeowners aren’t denied the opportunity to own their home which should help fix the "broken ladder".
Andy Portlock, Finance Director at Hadley Property Group, said: “It is encouraging to see the home building sector being recognised with the announcement of loan and guarantee schemes to encourage both new home buyers and those looking to move further up the property ladder.”
Steve Roche, Persimmon Homes’ Group Communications Director, said: “We obviously welcome the Help To Buy initiative. Since Christmas we have already seen the market begin to improve with initiatives including FirstBuy and NewBuy. From the information released to date we are very pleased that the Government recognises the importance that the new homes industry plays in the much needed growth of the UK economy.”
Most real estate agents were equally supportive.
Brendan Cox, Managing Director of Waterfords, said: “Previous Government initiatives put in place to ‘stimulate’ the property market have all pretty much focused on sectors or segments of the market. Although they have gone some way in assisting, they haven’t had the desired effect as the real problem challenging the market has always been in regards to mortgage availability and the tightened restrictions on lending.”
Robert Bartlett, CEO of Chesterton Humberts, said: “As the Chancellor mentioned in his first-ever tweet on the morning of his speech, this budget was aimed at helping people who just ‘want to work hard and get on’. Overall, I welcome the measures relating to the housing market which definitely represent good news for aspiring homeowners and the house-building sector, but I am still questioning whether there was enough in the Budget to really build on and sustain the momentum seen so far this year."
Karelia Scott-Daniels, Managing Director of buying agents Manse & Garret Property Search, said: “This time last year our office went into overdrive. Thankfully there have been no further increases to stamp duty this time and rather than messing up my day, the chancellor will have given many buyers at the bottom end of the property market cause for cheer this time, but there were no measures which would have such a significant impact on overseas investors as in last year’s budget.”
Paul Smith, CEO of Spicerhaart, said: “It was good to see in this year’s Budget that the Chancellor George Osborne has been listening to the concerns of house buyers and through the Help to Buy Scheme is offering some much needed financial support. In a clear homage to Margaret Thatcher’s Right-to-Buy scheme of the 1980s, the Government will provide billions in guarantees to support anyone struggling to either get on the property ladder – or move up the property ladder for that matter. The fact that such a scheme is not limited to just new builds for first-time buyers but buyers as whole has to be warmly welcomed as this opens up the scope of the scheme to so many more people than previous initiatives, and with it, the potential to build on the green shoots of recovery that we’ve been seeing in the UK housing market in recent months.”
Richard Barber, partner at Prime Central London estate agency, W.A.Ellis, said: "A fully functioning and active housing market is essential to the health of the economy, so it’s good news that the government is taking steps to stimulate the market with the Help to Buy announcements. The increased build to rent fund is also a positive step to ensuring that our housing meets the needs of our growing private rental sector. We’re also pleased that there were no further announcements to increase tax on property at the upper end of the market which should calm the nerves of the overseas property investor.”
Peter Wetherell, Founder and Chairman of Wetherell Mayfair Estate Agents said: “It has taken us 12 months to digest the March 2012 budget, so thank goodness it appears that there are no surprises this year for the property industry, only positive.”
Roarie Scarisbrick, Partner at buying agents Property Vision, said: “The destructive impact of last year’s budget measures has not been alleviated but at least no further damage has been done to the property market. Whether the Government’s ‘Help-to-Buy’ scheme will have more success than previous schemes will be closely monitored but this has the potential to help boost the number of new homes available with positive knock on effects for the construction industry and other businesses linked with the property industry.”
Others felt the measures did not go far enough.
Jonathan Moore, Managing Director of Easyroommate.co.uk, said: “There is still a huge supply and demand imbalance in the rental market, and this needs to be addressed. Boosting house-building is one part of the answer but the Chancellor has missed a golden opportunity to unlock accommodation sitting idle across the country.”
Adam Day, real estate agent at Hatched.co.uk, said: “Nothing the government has said will aid the housing market. A toothless bunch, the market has recovered through hard work and honest advice from estate agents, not the policies or schemes that the government has introduced in recent years. If the government wants to help, then they need to understand that there are simply not enough properties to sell in the UK, which is why many first-time buyers struggle to ‘get on the ladder’. The irony is that there are many thousands of properties lying empty in cities across the country, which the government hasn’t tackled.”
Stephanie McMahon, Head of Research at Strutt & Parker, said: “Although we welcome schemes to assist those wishing to purchase their first or subsequent new homes, the challenge of the Help to Buy scheme will be in ensuring those who reach the end of the five-year period of grace are in a position of wage inflation to be able to meet the new payments expected of them.”
Donna Houguez, Market Analyst for Quick Move Now, said: “I think it is admirable that the Government is making this statement of support to the property market, and it clearly hopes that creating movement in this one sticky area will, in turn, stimulate the layers above. However I am concerned that take up of past government schemes, from lenders, house builders and buyers alike, has been pitifully low and no rationale has been demonstrated to explain why ‘Help to buy’ is likely to be any different.”
Ed Mead, Director at Douglas & Gordon, added: “With VAT on refurbishment and SDLT remaining unchanged, it may seem churlish to decry any form of support for the property market, but the fact is that the Help to Buy scheme is simply an alternative mechanism to boost use of the funds in the under-performing Funding for Lending scheme.”
Tax avoidance also came into focus in the budget statement.
Linda Beaney, Director of Beaney Pearce, said: “The main point of interest for offshore property owners is the focus on the Isle of Man, Jersey and Guernsey’s vehicles for tax avoidance and, far worse, "evasion". Given the predominantly blue chip structures and operators that use these havens, it will be interesting to see if much can actually be delivered as a result of that focus or whether it is pandering to press pressure. In the face of the laundering level that apparently journeys through Cyprus, it sounds like the proverbial "pimple on the elephant". However, it will cause buyers to re-evaluate their method of acquisition and possibly cause hesitation in acquisition transactions and a speeding up of some such disposals."
Andrew Batt, International Group Editor of PropertyGuru, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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