In 1997, the majority of 25-34-year-olds owned their own home (55%) now, this figure stands at just 41%.
Martijn van der Heijden(pictured) is chief strategy officer at Habito
In 1997, the majority of 25-34-year-olds owned their own home (55%) now, this figure stands at just 41%.
Ahead of next weeks’ Budget, we believe there are three significant steps the Chancellor can take to look to fix some of the issues in the housing market and get Britain moving. These are; rethinking stamp duty, securing confidence and busting the jargon.
Rethinking stamp duty
Some level of reform to stamp duty looks all but certain. The challenge is that revenue from stamp duty a money-spinner for government coffers - it brought in almost £12bn in 2018/19, almost double the amount it raised in 2010/11.
But for first-time buyers, the relief thresholds have failed to keep up with the market. For those buying in London, it is applicable only on houses up to £450,000. Given that, as of May 2019, the average house price in London was £457,471, many would argue it’s no longer relevant.
The government should not only reconsider the thresholds but link them to regional house price growth.
With just two thresholds (for in, or out of, London), stamp duty fails to account for regional disparities in the rate of house price growth, impacting areas such as Nuneaton & Bedworth, Stockport and Leicester, which have bucked the national trend and seen double-digit house price growth in the last year, making them less accessible for first-time buyers.
Securing confidence
We’ve seen a focus from the government on house building, but not enough attention is paid to how buyers are supported throughout the process.
Anything to tackle this would be welcome, including introducing “reservation agreements”.
This would provide much needed certainty between buyers and sellers and bring speed to the market.
With one in five house sales in England falling through in 2018, thousands of people are suffering stress from being gazumped or gazundered at great personal cost.
A fee should be in-line with the average cost of a house-sale falling through (around £1,000 for each party involved) - ensuring a firmer commitment is made from both sides.
Busting the jargon
Our research shows that 58% of homeowners are put off switching to a better mortgage deal by over-complicated jargon. And, even if borrowers read their terms and conditions, which 75% don’t, over half of them can’t understand them, as they’re written in over-complicated language.
A lack of switching is costing the nation £15.5bn every year. A huge nine in 10 people we surveyed called for the language used in financial contracts to be simplified and nearly all (95%) said the government should regulate to force providers to make contracts and T&Cs easier to understand.
The government can play a central role in supporting lenders to empower borrowers by ensuring their documents are accessible.
We’re asking the government to push the FCA to bring lenders, brokers and consumer groups together, to stamp out jargon once and for all - starting with bringing down the reading age for mortgage contracts.
