In anticipation of Chancellor Jeremy Hunt’s upcoming fiscal statement, the housing sector yet again stands at a pivotal crossroads.
With the general election looming, and housing established as a key battleground by both the public and industry leaders, this Spring Budget could mark a significant turning point for the UK’s housing market.
Stamp Duty reforms
The precedent set by George Osborne’s stamp duty overhaul in 2014 and the subsequent emergency Stamp Duty holiday introduced by Rishi Sunak in 2020 reflected the profound impact SDLT policy can have on the housing market.
Following a year of high interest rates and living costs, the necessity for further reform is evident. A reinvigorated stamp duty holiday can catalyse market activity, benefiting up-sizers and stimulating the housing supply.
However, it’s important to recognise a more holistic approach is needed to avoid the unintended consequences of past policies, such as inflated house prices and reduced mobility within the market.
Addressing affordability and accessibility for first-time buyers
The Government’s exploration of 99% mortgage guarantees represents an appetite to enhance deposit affordability, yet without addressing the broader issues of mortgage affordability and the chronic under-supply of housing, such measures risk being ineffectual.
The focus should thus shift towards a comprehensive strategy that encourages the development of new housing to meet the long abandoned government housing targets, and financial support for lenders looking to support first-time buyers, without exacerbating the risks of negative equity.
Building on brownfield sites? Not without planning reform
The recent promises by Housing Secretary Michael Gove to prioritise brownfield sites and streamline planning processes are steps in the right direction.
However, the effectiveness of these measures is contingent upon their execution and the willingness to engage in substantive planning reform.
The ultimate solution lies in a concerted effort to increase the supply of housing, addressing the multifaceted crises of homeownership affordability and rental market pressures.
Looking ahead: A call for structural change
As we approach the Spring Budget, the call for a strategic, long-term vision for the housing market has never been louder.
The need for a structural shift towards increasing the supply of affordable and social housing is paramount.
This encompasses not only immediate policy changes, such as stamp duty reform and mortgage guarantees, but also a steadfast commitment to building more council houses and embracing planning reform.
The forthcoming Budget presents an opportunity for transformative change, addressing the immediate challenges while laying the groundwork for a more equitable and sustainable housing market.
It is a chance to not only stimulate economic activity but also to fulfil the fundamental need for safe, affordable housing for all segments of society.
In this pivotal moment, the government’s actions will determine not just the immediate fiscal landscape but the very fabric of our property market for years to come.
Sophie Mitchell-Charman is commercial director at LendInvest
