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Autumn Statement – The end of the age of austerity?

System Administrator

December 2, 2013

Rob Clifford is chief executive of Century 21 UK and group commercial director at Shepherd Direct Group

With just days to go until George Osborne announces his Autumn Statement to Parliament we all wait with bated breath to see whether the Chancellor will decide to call the end of the ‘age of austerity’ and what this might mean in practice for UK plc as a whole but in particular the housing and mortgage markets.

It’s fair to say that Osborne is likely to stand at the despatch box in a bullish mood given the stream of economic data pointing to a recovery. Indeed the governor of the Bank of England himself suggested we are witnessing a sustainable improvement with key features such as falling unemployment and improving GDP all contributing to the rise in belief that the worse is now behind us. 

To say that we are completely out of the woods might be a step too far however with only 18 months until the next General Election I suspect Osborne will want to issue a Statement which highlights the improvement but also attempts to sweeten the pill for an electorate that has had to deal with a particularly austere three and a half years.

Just how he does this is open to much debate but, even after the significant focus on the housing market over the past year from this government, we should still not rule out even further interventions. 

One area where Osborne may be sitting on the fence – when it comes to tweaking the current system – is that of stamp duty land tax. Calls for a revision of the slab/threshold approach we currently have appear to be growing louder by the day but will Osborne and his team be persuaded?

Certainly, there are many hoping for a change – just recently the National Association of Estate Agents added its voice to the campaign with a plea for Osborne to review current arrangements arguing that the often sizeable stamp duty cost remains a barrier to home ownership. 

It’s fair to say that many potential purchasers will still have to think twice about their ability to buy even with growing levels of low deposit mortgages available, simply because of the added cost that comes with buying.

And while Osborne might be sympathetic to these calls – this is the man after all who is responsible for Help to Buy – you can’t help wondering if the sound of stamp duty income rolling into the Treasury coffers will drown out these voices. 

The simple fact is that a property market which appears to be growing in strength is a huge boon to Osborne and is certainly helping him achieve his commitment to bringing the deficit down.

Figures for October revealed that the Treasury benefited from stamp duty revenue to the tune of £852 million which is slightly higher than the £830 million a month it was receiving at the height of the boom in 2007/08. 

Of course we have to factor in the point that stamp duty thresholds have been changed since then with more being recouped from larger property transactions but you can see why Osborne might be reluctant to tweak a scheme which is likely to bring him more than £1 billion more this year than anticipated.

Then again if a stamp duty review can help even more numbers onto the property ladder and, along with Help to Buy, help both first-timers and second steppers then Osborne might think a few changes at the lower price thresholds could be a goer. 

Given the strength of the London property market – which apparently is providing most of the increased stamp duty revenue – commentators don’t think he will tinker with properties above £500k however there may be an urge to shift the zero band up beyond £125k whilst he could also reinstate the stamp duty holiday for first-timers perhaps to a point just beyond the election.

All in all, and given the predilection for Christmas giveaways, it would not be surprising to see the Chancellor don Santa’s costume at the Autumn Statement and dish out a raft of voter-pleasing presents. 

Certainly some movement on the stamp duty thresholds below £250k is likely to give a further amount of festive cheer for those individuals looking to make the most of their money in the new 2014 Help to Buy housing market environment.


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