Scheduled to take place on Monday 29th October, it serves as an opportune moment for the government to address some of the challenges currently facing those seeking to purchase a property or pursue a new investment opportunity.
Speculation is rife concerning the types of reforms that could be announced. However, there is also a chance the chancellor’s statement could fall well short of the mark in delivering the necessary reform to address the imbalance between housing supply and demand. Unfortunately, the government’s track record towards the housing market has been notably inconsistent.
Since the beginning of 2018, numerous commitments have been made by the government to address the current housing crisis and the challenges faced by those seeking to purchase a property. Unfortunately, many of these plans have taken a back seat as a result of the Brexit negotiations, not to mention the string of high-profile resignations and the appointment of a new housing minister.
As a result, the struggles faced by those seeking to access new real estate opportunities persist, and according to the most recent survey from the Royal Institution of Chartered Surveyors, affordability constraints, a lack of stock and economic uncertainty continue to pose challenges.
It is clear that effective solutions are warranted, and I hope to see some promising new policies introduced as part of this year’s Autumn budget.
What can we expect from the 2018 Autumn Budget?
In an effort to tackle the housing crisis, Theresa May announced at the Conservative party conference the government’s plans to increase stamp duty for overseas buyers and companies that are not tax resident in the UK. The move has been designed to curb foreign investment and thereby increase the property opportunities available to UK residents.
Meanwhile, reports have suggested that landlords could be given a tax break when selling properties to their long-term tenants. As landlords currently face capital gains tax of up to 28% on profits, this measure is intended to reduce these penalties and encourage more people to make the transition from tenants to homeowners.
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These proposed reforms signal an effort to support the property market, but fall short of solving the current imbalance between supply and demand, or the challenges faced by those looking to jump on the property ladder. Penalising foreign investors for getting involved in the property market discourages investment in real estate, which should instead be encouraged. UK property has long been an attractive asset for both national and international buyers alike, and strong levels of investment have helped the market thrive.
Continued foreign investment should, therefore, be encouraged, as well as a renewed focus on creating more opportunities that appeal to all types of homebuyers – ranging from those purchasing their first home to seasoned investors expanding their real estate portfolio. This must also include a renewed focus on housebuilding to address the current housing shortage and keep up with the strong demand for real estate.
What property reforms does the UK want to see?
Earlier in the year, Market Financial Solutions (MFS) conducted nationally representative research to find out what real estate reforms the UK public would most like to see the government introduce. Some of the most popular policy measures were new laws to prevent gazumping (desired by 55%), the removal of inheritance tax on property assets (46%) and new incentives, such as a reduction in stamp duty or increasing the scope of Help to Buy schemes for both first-time buyers and existing homebuyers who purchase a new build (40%).
Moreover, there seems to be a lack of market awareness towards alternative finance products that could help homebuyers quickly complete on a deal and not become stuck in a prolonged chain. A separate report by MFS found that 46% of people believe they do not have enough knowledge or confidence in finance options, other than mortgages, to consider using them. Alternative sources of capital that are more flexible and easier to obtain can help prospective homebuyers quickly take advantage of property opportunities that come their way.
With the country gearing towards Brexit, it will be interesting to see how the government plans to support the property market through this transition – and whether it will take this opportunity to increase people’s ability to access real estate opportunities and address the imbalance between housing supply and demand.
Ultimately, creative measures are clearly needed to ensure that the UK remains a leading destination for property investment.