What is on the industry wish list for the Autumn statement and what does it expect in reality?
Hargreaves Lansdown head of personal finance Sarah Coles thinks plans to offer first time buyers more mortgage support are likely to be delayed until the spring. The current mortgage guarantee scheme, which helps buyers with a 5% deposit, is set to run into December.
London estate agent and former Rics residential chairman Jeremy Leaf is not overly optimistic for any significant progress in this space. “The mortgage guarantee scheme sounds good in theory but in practice there has been relatively low take-up.
“It is all very well saying that we are doing this to help first-time buyers but it doesn’t make a good deal of difference. A turbocharged mortgage guarantee scheme could help, but it needs to be more accessible, particularly for single first-time buyers”.
Spicerhaart and Just Mortgages chief executive John Phillips argues that given the current climate and the real stresses on affordability, extending the mortgage guarantee scheme feels like a no-brainer, particularly as mortgage rates continue their downward trend.
“A stamp duty holiday also feels likely, especially as it has long been the government’s ‘in case of emergency, break glass’ policy. While broader changes to stamp duty would be most welcome, the measure does always have the desired result of increasing activity. For the sake of the wellbeing of brokers and the wider chain, let’s hope any change doesn’t come with a ‘cliff-edge’ deadline like before!”
Phillips adds that with so many potential buyers struggling with affordability, he’d be in favour of a return of Help to Buy – or something similar that would also include second-hand properties.
“While this doesn’t seem likely given the conversations at the recent Tory conference – and opinion is split on the success and legacy of the scheme – there’s no question it encouraged activity and boosted the market. If not Help to Buy, greater government support for schemes such as Shared Ownership, which is probably the only way for many to buy a property in the current climate”.
Coles points out that calls to raise the limit on the price of a property you can buy with a LISA appear to have been rejected.
Runaway house price rises over the past five years have rendered the £450,000 limit much less generous than it was back in 2018.
Changes to the LISA limit may not be on the cards but that is unlikely to stop the demand for action.
As Bestinvest managing director Jason Hollands stresses, since the LISA launched, UK property prices have increased by a third and the £450k property purchase cap is problematic in many parts of London and the South East.
“In my view, the LISA purchase price cap serves no rational purpose and should therefore be scrapped entirely. The amount that can be invested in LISAs, and the ‘cost’ to the Treasury coffers, is restricted by the annual allowance, so who cares what value of property these accounts are used to purchase?”
How likely is it the Chancellor will include changes to stamp duty in his Autumn Statement?
Leaf says there has been lots of talk over the past few days about whether the Autumn Statement will look at stamp duty and inheritance tax. “With regards to stamp duty, we don’t believe any tweaks may be appropriate unless they are really focused on first-time buyers”.
He adds: “It is so vital to help first-time buyers because they are the lifeblood of the market, they trade up – unlike investors – and we need more transactions because they are good not just for the property market but the general economy as they have a multiplier effect on other businesses”.
Moving specifically to the rental sector, Phillips would like to see greater support for landlords and in particular tax reform to increase the incentive to rent property and build a portfolio.
“While this is unlikely, it is critical as our lettings team watch on as its book goes down and landlords sell up. Despite this, rental enquiries still queue around the block. With all the landlord bashing that goes on, especially from the government, it’s certainly a case of be careful what you wish for.”