Autumn Budget 2018: What reforms does the property sector require?
Paresh Raja, chief executive of Market Financial Solutions
Next Monday, the government will be delivering the 2018 Autumn Budget – the last major fiscal announcement prior to Brexit officially beginning in March 2019.
Despite the important timing of this announcement, there are concerns this Budget could be noticeably light on reforms given the uncertainty surrounding the terms of the UK’s withdrawal from the EU. This is despite the challenges currently facing those in the property and finance industries.
What we know so far…
The Conservative Party Conference has already shed some light on what can be expected as part of next Monday’s announcement. Prime Minister Theresa May reaffirmed the government’s commitment to fix the broken housing market and encourage more people onto the housing ladder.
Such statements are reminiscent of similar speeches made at the beginning of the year about the housing market, and while there have been some movements in the right direction, they have fallen well-short of addressing the problems still being faced by homebuyers, renters and investors.
In terms of policy, the Prime Minister announced new reforms to stamp duty for overseas buyers and companies – a move designed to curb foreign investment and thereby increase the property opportunities available to UK residents.
Unfortunately, this change will do little to address the property shortage or the availability of affordable housing for first-time-buyers, and instead is likely to make UK property less appealing to overseas investors.
More positively, in an effort to do away with excessive ground rents – which often run to hundreds of pounds a year – the government has also proposed to scrap leasehold on new build properties. Meanwhile, further leasehold reform could see ground rents capped at a nominal fee of £10 on new leases, and greatly reduce the financial pressure on owners of leasehold estates.
Housing cannot take a back seat
Despite the government’s move to make housing a priority, much more needs to be done to ensure that there is adequate provision of housing and that all groups can take advantage of real estate opportunities.
This involves a renewed focus on increasing housing supply in order to meet growing demand for property, and a willingness to consider creative new measure beyond the construction of new-build homes.
Research by Market Financial Solutions recently revealed the property policy reforms people would most likely want to see. We found that 55% of Britons strongly support the introduction of new laws to prevent gazumping, with this number rising to 64% among those who own one residential property.
Public support for this reform clearly demonstrates how common it is for people to lose out on a property acquisition due to last-minute bids being made by rival buyers.
Meanwhile, improving the market’s knowledge of alternative finance options is also necessary to support prospective homebuyers seeking real estate opportunities.
Supporting investment into real estate
Despite the uncertainty clouding the ongoing Brexit negotiations, the UK’s real estate market remains resilient and continues to attract strong levels of national and international investment – a trend that should be encouraged in the lead-up to Brexit.
This year’s Autumn Budget also presents a timely opportunity for the government to address pressing issues like imbalances in supply and demand of housing, as well as introducing reforms to improve accessibility for all groups looking to participate in the property market.