Mini-budget: Property professionals react – Peer2Peer Finance News

200,000 people have been lifted out of paying stamp duty from today, after Chancellor Kwasi Kwarteng’s mini budget raised the threshold from £ 125,000 to £ 25,000 and from £ 300,000 to £ 425,000 for first-time-buyers.

The move – along with an array of tax cuts – has been met with a mixed reaction from the property industry.

Stuart Law, chief executive of peer-to-peer lending platform Assetz Capital, which provides finance to housebuilders, said that a stamp duty cut “gives with one hand and takes away with the other”.

Law explained that while the cuts would grant more first-time-buyers access to the housing market by “offsetting mortgage rates and rising house prices”, buyers would likely have savings canceled out through mortgage repayments against a backdrop of rising interest rates.

Read more: BoE rate hike could boost property investing

“The only way to truly support the housing market long-term is to stimulate supply so it better balances demand, with affordability as the natural outcome,” he said.

“In that sense, the proposals announced by the government to reform the planning system are exactly what’s needed, just not in tandem with a huge demand stimulus at a time when it is already impossible for the housing sector to keep up with demand at its current level. “

Kwarteng also confirmed in today’s mini-budget that planning rules would be liberalized to kickstart development, although no further details were given. However, he did confirm there would be no stamp duty paid on purchases of land and buildings for commercial or residential development.

Read more: Alternative investments to beat inflation

“We have long needed an overhaul of our overbearing planning system, which dramatically restricts our ability to build more homes,” Law said. “The planning reforms proposed today should therefore be broadly welcomed, although we have seen proposals of this nature come forward before many times, only for them to be kicked into the long grass.”

The implementation of investment zones, which cut planning red tape, are expected to lower the cost of development in relevant areas and allow for more homes to be built efficiently.

According to Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, while cuts were a signal of the Treasury’s concern about rising rates, the stamp duty cull would conversely “squeeze the life out of the housing market.”

“Higher mortgage rates and higher property prices form a toxic cocktail, that risks killing off demand,” she said. “For buyers facing forking out thousands of pounds right now, it’s a welcome change. However, there’s every chance that the change doesn’t drain the toxic cocktail, it just remixes it. “

Read more: How property platforms came to dominate the P2P sector

Coles explained that even if the change did persuade more people to buy, a shortage of buyers “isn’t the biggest problem facing the property market right now.”

“The real brake on the property market is a severe shortage of supply, because the average agent only has 36 properties on the books,” she said. “Stimulating demand without addressing this just risks pushing prices higher.”

According to Jatin Ondhia, chief executive of P2P property platform Shojin, the move fails to acknowledge that the UK property market extends far beyond stamp duty, given the range of stakeholders it impacts, including developers, investors, agents and service providers.

“Once again, as turbulence has struck, the government has reacted quickly to support the market, just as they did with the Covid-19 stamp duty holiday,” he said. “It will be interesting to see what impact this has from an investment perspective… we have seen retail investors deterred from buy-to-let purchases due to higher tax bills, but will this stamp duty cut offer enough incentive to reverse that trend?”

Leave a Comment

Your email address will not be published.