Comment: My response to the Chancellor’s budget
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Trevor Abrahmsohn, director of north London agents Glentree Estates, believes the governments new housing proposals, as part of the Budget 2017, will go some way into making home ownership “a human right, rather than a privilege”
The abolition of stamp duty for first time buyers up to £300,000 is a very good initiative, however, whilst it is a very welcome £5000 gift for these vulnerable groups, it never the less may serve to ‘stoke up’ the market at the lower end, which could perversely, work against them.
The former Chancellor Osborne, reduced stamp duty at the lower end which exacerbated inflation in this sector from circ 5-8 per cent, particularly in London, and this served to disenfranchise buyers at this end of the market since their deposits were not rising at the same pace as prices.
The concession of a £300,000 ‘holiday’ on stamp duty on properties up to £500,000, which must include much of London based areas and is welcome indeed.
The £44bn of government support and loan guarantees to boost construction skills is very necessary, particularly as we lose some EU nationals from the uncertainty surrounding Brexit, who would normally gravitate to this employment sector. I have always said that, in some cases, the youth should be directed towards certain key skills by way of apprenticeships, rather than university degrees, since the former are so crucial to our post Brexit survival and to build more affordable homes. A bricklayer, for instance, can earn up to £150,000 per annum, which elevates them from ‘blue collar’ status to the new ‘middle class’ and we are desperately short of them today, in the construction world.
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The doubling of council tax premiums on empty properties could be a little too modest, but it is an illustration of the government’s determination to increase the supply of new housing.
Developers of all kinds and creeds will be worried abut the threat of a compulsory purchase of land, banked for judicious financial reasons and this will certainly keep them ‘on their toes’. However, if these are in an area where there is an oversupply of unsold properties, I am not sure if you will ever persuade them to build more properties that when complete, will exacerbate the stock overhang and reduce prices even further.
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The solution to over supply is to get the housing market moving again which has, in some cases, ground to a halt, because of the high stamp duty charges imposed by the previous Tory party regime.
If all the initiatives manage to increase the housing supply from 217,000 to 300,000 new homes, this is indeed a great accomplishment. But, to put it in context, it is still no more than were built under Margaret Thatcher’s reign in the 80s.
One would have thought that the analysis of the housing market, as it relates to the planning process, would have already been completed by now, without the need to initiate a government scheme to look into this important matter. Quite apart from the numbers of planning consents, which have not been built out, there needs to be a ‘root and branch’ reform of the planning process itself, in order to ‘weed out’ petty local politics, so that planning applications are dealt with on planning criteria and nothing else.
Permitted development rights have certainly increased the supply of residential properties that have been converted from offices and this ‘quick fix’ method needs to be extended even further. As Isaac Newton so eloquently put it, ‘any action causes another equal and opposite reaction’. Rent of commercial space has gone up as a result of there being less supply, which is good for the landlords but not for the businesses that take the space and who are already under pressure. Reigning back business rates for instance will certainly assist.
The £3bn reserve to prepare for Brexit is very necessary and will demonstrate to our obdurate EU counterparts, during the heated negotiations taking place as we speak, that we are prepared for every eventuality, including ‘no deal’.
As to the budget deficit, it is moving in the right direction, albeit more slowly than predicted which, perhaps, demonstrates that the chancellor is willing to ease the pressure on austerity, whilst still keeping government finances in kilter.
Goodness knows what would happen if an unbridled Labour, Marxist, administration were to get their ‘thieving hands’ on the budgetary levers of power, by opening the sluice gates of spending/borrowing and before we look around, the ‘banana republic’ deficit that Gordon Brown and his ‘merry men’ imposed on us, will look like a ‘walk in the park’.
I support Mr. Hammond’s initiative, wholeheartedly, by applauding the government’s laudable aim of making home ownership a human right rather than a privilege, as at present.
For more information at Glentree Estates, visit glentree.co.uk