More thoughts on the Autumn Statement


Thursday 6th December 2012

Chancellor George Osborne.

The morning after the day before and reactions to yesterday's Autumn Statement from those working in the property industry are still flooding in.

Brief summary:

New homes
The government has already pledged to increase the supply of desperately needed new homes in this country, including more affordable homes, and this will be complimented by various major infrastructure improvements.

Infrastructure improvements
Major infrastructure projects can help to make an area more desirable and potentially boost local property values. The most high-profile scheme announced during the Autumn Statement was the Northern Line extension. The regeneration of area around Battersea Power Station offers enormous opportunities, particularly for early bird investors.

Council Tax
The chancellor referenced the three years of council tax freeze funding as he listed the ways the government has helped families. The confirmation that there will be no new council tax bands will please some people, particularly those living in high value properties.

Properties held in a special purpose vehicle (SPV)
Wealthy homeowners are still waiting for clearness on the taxation of high value properties held in corporate vehicles. Much uncertainty in recent months has dampened demand for homes in prime central London.

Here are a few more thoughts from the property industry:

Stephen Teagle, managing director of Affordable Housing & Regeneration at Linden Homes commented: "To tackle the desperate shortage of housing across the country the Government must act quickly to accelerate the release of publicly-owned brownfield land.
"We believe the Government and industry must continue to work together to educate buyers about the many different affordable mortgage options available to not only first time buyers but those with little or no equity within their homes.

"Over the last 12 months we have worked with a range of high street lenders to bring a number of 85, 90 and 95% deals to the market and we must continue to make people aware that owning a new home is more affordable than ever."

James Poynor, Managing Director of Countrywide Land & New Homes, said: "We welcome the announcement by the government to invest£10bn in the construction of 120,000 new homes to tackle the serious issues of shortage of supply.

"However, the issue of supply should not be viewed in isolation. While building is the cornerstone of the housing market's recovery, land is a developer's lifeblood. As planning minister Nick Boles was right to highlight we need to free up more land for development.

"The announcement was a missed opportunity to outline a blue print for making more land available to build much needed housing."

Jeremy Richards, head of Jones Lang LaSalle's Bristol office, said: "New infrastructure investment in roads, transports and schools offer significant relief, along with investment for 9,000 much-needed new homes in the South West."

Mark Blackwell, managing director of xit2, the mortgage and property data experts, commented: "The pinch in the wider economy is set to go on for several years. But the pinch on homeowners and "mortgage prisoners" has been softened just a little by one of today's announcements. ‘Support for Mortgage Interest' was given a far shorter, 13 week qualifying period in 2009 - as an urgent measure to help people struggling with their mortgages. They still need that support and the Chancellor is right to recognize that by extending the scheme to March 2015."

Patrick Bullick, Chairman NAEA London Region & MD STANLEY Chelsea, Commented: "Stamp Duty remains very high and he has left in the air ambiguities about Capital Gains Tax (CGT) and an Annual Asset Tax on higher value properties owned by foreign companies and trusts."

Peter Williams, Executive Director of the Intermediary Mortgage Lenders Association (IMLA), said: "The Chancellor clearly faces a difficult task to prioritise spending when funds are so scarce, so it was encouraging that a £10 billion pledge for new housing featured alongside capital investment in science, transport and education. Housebuilding has not kept up with rising demand in recent times, and there is a pressing need for new, affordable housing to meet a shortfall that is estimated at around 100,000 homes."

Mathew Evans-Pollard, development director at Deloitte, commented: "This [the guarantee to support £1bn of borrowing to extend the Northern Line to Battersea] is a very positive step forward for the Vauxhall Nine Elms on the South Bank regeneration area and provides the certainty that has been sought for the Northern Line Extension."

Shirley Humphrey, Director at Harrods Estates, said: "We welcome the news that the British Government has decided not to impose ‘mansion taxes' on the UK property market.

"The top end of the housing market has remained buoyant and is vital in attracting investment in to the UK and London especially. The capital city continues to attract international investment through its currency returns and stable political climate and today's announcement will provide encouragement to house buyers going in to 2013."

Philip Hogg, Chief Executive of home building industry body Homes for Scotland, said: "We look forward to further announcements from the Scottish Government on how this new funding [Scottish home building industry will receive £394m of additional capital funding as a consequence of yesterday's announcement], together with any consequentials arising from previously announced details of £10bn of guarantees across the UK to support the building of first time buyer, affordable and rented homes as well as £225m to accelerate the delivery of large housing sites, will be allocated."

Ed Mead, Douglas & Gordon, commented: "The central London property market appears to have dodged a large bullet subject to next week's detail. The long term effect of the pension changes with rising inflation, lowered annuities and frankly a good chance of some funds not being able to keep up payments must mean that property is a better long term bet than a pension."

Philip Selway, Managing Partner of The Buying Solution, commented: "It is good news that the Chancellor has stated that there will be no new property taxes. The property market contributes hugely to the economy - not only due to the tax income generated by SDLT, but from the revenue and employment that moving house creates. An active property market is imperative in helping the economy move forward - it fuels the requirement for a range of services - not just those surrounding the immediate transaction but others such as removals, and encourages consumer spending on white goods etc."

Brian Murphy, head of lending at Mortgage Advice Bureau, responded: "George Osborne is to be applauded for including affordable housing among the government's priorities for spending when resources are so tightly constrained. The pledge to support the construction of 120,000 new homes, bringing the annual total to 230,000, will go a long way to ease the pressure on the nation's current housing stock."

Jasper Feilding, head of London Country at Carter Jonas, commented: "The increase in stamp duty from 5% to 7% for properties over £2m introduced in the last budget is still proving to be a considerable hurdle for vendors trying to sell properties being marketed with guide prices in the low £2m bracket in the country house market. Houses that pre-budget might have easily achieved a figure slightly in excess of £2m are becoming increasingly difficult to achieve that figure as a direct result of the 2% increase. We are now seeing a pricing correction in the £2-£2.5m market of anything between 7-10%. The absence of a further tax on property is welcomed".

Grainia Long, Chief Executive at the Chartered Institute of Housing (CIH), said: "Housing can help the economy return to growth, but only with the right backing. I'm afraid the government has failed to fully capitalise on the momentum generated by earlier pledges to boost housing.

"While the Chancellor's promise to invest £225m to boost the construction of 50,000 new homes is welcome, it is only a small contribution compared to the scale of the problem.

"The country's chronic undersupply of housing continues to generate misery for hundreds of thousands of families and individuals and it is crucial that ministers start to address this. The autumn statement makes it clear government still hasn't recognised the scale of the crisis."

Malcolm Chumbley, head of UK development agency at Cluttons, commented: "We welcome the continued support for first time buyers and others at the lower end of the housing ladder in the mortgage incentive schemes (NewBuy and First Buy). These have generated an increase of 35% in the value of new mortgages to first time buyers. However, the numbers are still small in absolute terms. In part this is due to caution over the jobs market and economy which will be slow to clear. Without this necessary movement at the lower end of the market we expect to see another slow year for the housing market and as a result we do not see any reason to adjust our forecast for UK house price which shows a slight fall in values in 2013."