The state of the residential housing market is uneasy to say the least. The industry is on tenterhooks as all stakeholders prepare for Labour’s imminent November Budget, which could have a significant impact on firms and consumers across the country.
There have been numerous unhelpful leaks from the government regarding potential changes to tax policy in housing. Boon Brokers have covered these leaks extensively through our research, most of which have been highly damaging to the sector as they resulted in speculative changes in borrower behaviour. For example, as many buyers believe that Stamp Duty Land Tax may be scrapped and replaced with an annual tax on high value properties, this leak has stalled purchase transactions, which has had a ripple affect across many different businesses.
We are yet to understand the full adverse impact of these leaks on the housing market, but it will be interesting to assess the data in upcoming months.
The general mood of the general public with regard to housing is worry. Due to the makeup of the UK economy, most consumers hold their wealth in property. Therefore, any Government intervention in this area is always going to be anxiety-inducing, as it could directly damage assets that consumers have dedicated their lives to purchasing.
When speaking with clients, there is a consensus that there will be strong winners and strong losers from the proposed changes to Government tax policy on housing. On the one hand, scrapping Stamp Duty would be excellent for social mobility and to assist people with moving up the housing ladder who have the funds to do so. However, there is a worry that this is measure would be highly inflationary for lower valued properties. Given the ever-inflating rental market, first-time buyers (FTBs) are trying to get on the housing ladder at the earliest opportunity. By scrapping Stamp Duty, we are likely to see a quick rise in properties valued over £300,000. This could make it even more difficult for FTBs to buy their first home and leave many trapped in rental properties.
Despite the doom and gloom from society about the state of the UK’s housing market, at Boon Brokers, we are remaining positive for the future of the sector. Our mission is to provide fee-free mortgage and protection advice, accessible to all in society. In times like these where the economy seems on the brink of a major crisis, having access to professional advice is more important than ever. Let’s keep our fingers crossed that Labour’s budget in November yields positive results for the UK economy – it’s likely to be one of the most important fiscal announcements in recent decades.
Gerard Boon is managing director at Boon Brokers
