Budging the Problem
In the autumn budget the Chancellor, Phillip Hammond made a series of changes designed to help the housing sector.
Abolishing stamp duty for first time buyers – including those purchasing properties up to £300,000 outside London - is a huge step in the right direction in helping thousands of people afford their first homes. The Chancellor has listened to the property industry and made this important change. He has also started on a path to create more new homes by easing planning obstructions and questioning those developers who may hoard land.
All this is good news. But governments often refer to housing as a catch-all subject when it is really several different topics: specifically new home construction, the rental sector and the pre-owned property sales.
Building new homes is crucial to help ease demand. But so too is making the process of buying and selling homes further up the market chain easier and cheaper as this will stimulate activity and create movement.
A workforce made inflexible because of property market inertia cannot be helpful to the economy. Taking draconian stamp duty away from first time buyers may bring welcome opportunities and advantages in that sector. But that doesn’t help second, third or fourth time buyers. At some stage first time buyers usually want to step up. If they are then prevented from doing so through the disincentive of high stamp duty this will create a logjam that will affect the entire market.
So perhaps in the next budget the rest of the market could be given a kick-start too through lower stamp duty.