Chancellor Kwasi Kwarteng’s first budget makes bold statements amidst the ongoing cost-of-living crisis, but as client Edward Heaton states, the devil will be in the detail.

Sitting against the backdrop of the pound sinking to a thirty-seven-year low and ever rising interest rates, Chancellor Kwasi Kwarteng’s first economic address packed several heavy punches to the energy, tax and property sectors. However, no budget is without its shortcomings, as our clients were quick to address. Read on to find out how these measures are expected to impact the property sector.

Stamp Duty Cuts

Permanent and immediate stamp duty cuts were announced by Chancellor Kwasi Kwarteng, with the threshold for home movers (currently £125,000) doubling to £250,000, as well as the threshold for first time buyers rising from £300,000 to £425,000. First time buyers will also now be able to claim tax relief on their properties, rising from £500,000 to £625,000, with the measures combined predicted to take 200,000 people out of paying stamp duty.

Edward Heaton, Founder and Managing Partner of buying agents Heaton and Partners, comments: “I have mixed feelings about the stamp duty cut given our business stands to benefit from these measures which will help fuel demand in an already highly competitive market, especially outside London. The extensions to the nil rate band will be welcomed by first time buyers and for those acquiring lower value properties especially, but I can’t help feel the result will just be to shore up demand as we head towards a recession.”

The cuts have been cautiously welcomed by Santhosh Gowda, Chairman of Strawberry Star, who said: “The stamp duty cut offers a welcome stimulation to the housing industry. It will encourage more people to move, including downsizers, which will free up family homes and allow first time buyers to get on the ladder. This will be a major fillip to the sector which faces cooling housing prices amid rising inflation and interest rates.”

Lynda Clark, CEO of First Time Buyer Group, highlights this positive impact these cuts could have on those just starting on the property ladder, commenting: “It’s about time the Government takes housing as a subject of address. Affordability remains a concern for the next generation of homeowners, with the average house price now above the current Stamp Duty threshold for first time buyers. The Government’s plans to ease this payment is a proven formula which will help to get people moving again, and could save homebuyers thousands during the most devastating cost of living crisis seen in a decade.”

John O’Malley, Managing Director of Pacitti Jones, is hoping for similar measures in Scotland, adding: “If Scotland was to implement this saving and raise the LBTT threshold from £145,001 to £250,000, it might encourage some of the landlords who’ve left the market, as a result of ill-conceived changes that have been implemented by the Scottish Government, to come back and allow more students to take up or continue their studies.”

Simon Cox, Managing Director of land agency Walter Cooper, comments: “Today’s statements from the new administration about its ambition to support the economy – particularly the housing market – have been very encouraging. Cuts to stamp duty will provide a strong incentive for movement throughout the property market.”

Alongside the stamp duty cut, Chancellor Kwasi Kwarteng revealed plans to increase the use of surplus land to build new homes through new ‘investment zones’, which will see the liberalisation of planning rules at in key areas.

Simon adds: “The details relating to the investment zones have yet to be seen but the designation of regeneration and development areas would lead to new growth. The question will be whether Truss will last long enough to actually make these changes and see them through to fruition, but ultimately, if the government is open for business, then the industry will welcome it with open arms and respond in kind.”

Addressing the housing industry head on

Today’s budget has been the one of the first in recent years to properly address housing, with our clients wanting this to remain top of the agenda going forwards. Geeta Nanda, the Chief Executive of the Metropolitan Thames Valley housing association and Chair of the G15 group of social landlords, explains why this is such a relief for those in the industry and what should be done further to promote more affordable housing opportunities.

Geeta Nanda comments, “Everyone deserves a home and the chance to live well, and this absolutely must be top of the government’s agenda, particularly given the economic strains we are seeing people experiencing thanks to record inflation rates, rising prices and unprecedented energy price hikes. Low deposit options are key to solving our housing crisis, and offer a real solution to first time buyers – particularly those who are stuck in the rental cycle and can only save a small proportion each month.

“As we look to the future, we will seek to engage the new PM and her government to work towards finding real solutions to the housing crisis and increasing the supply of affordable homes, whether through additional funding or through unlocking schemes to make the delivery of these homes viable. If we don’t act on this now, we could risk a lost generation of homeowners right across the UK.”