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‘We want to turn Generation Rent into Generation Buy’, said Chancellor Rishi Sunak when delivering his 2021 Budget this week. Here’s the industry reaction.
Timothy Douglas, Policy & Campaigns Manager for Propertymark;
Extending the increase to the Universal Credit Standard Allowance and the furlough scheme until September will help tenants plan ahead but much more is required to avoid a mounting crisis in the private rented sector. As the impact of Covid continues to bite and unemployment rates rise, we are increasingly concerned about how tenants will avoid future rent arrears and landlords will remain incentivised to stay in the rental market. There is a real need for the UK Government to ensure a wider package of measures to help tenants and landlords keep the rent flowing.
Mark Arnold, CEO, Kensington Mortgages:
“The stamp duty threshold extension and phased reduction is great for those still transacting. However, we fear that there will merely be another cliff edge in September, as homebuyers rush to complete amid a flurry of activity, causing conveyancing bottlenecks. We hope that the Chancellor has still left permanent reform of the thresholds on the table, and that we are simply on a journey towards this. Even if the threshold was maintained at the £250,000 it would still be beneficial to all parties, including the Treasury. Research we commissioned suggests that a £250,000 threshold would deliver a tax surplus of up to £540m compared to the £125,000 level
Mark Gordon, director of mortgages at comparethemarket.com:
Homebuyers with purchases in progress will breathe a sigh of relief because of the Chancellor’s extension of the stamp duty holiday. Our latest research shows three out of four homeowners, and two-thirds of first-time buyers believe a stamp duty holiday extension will benefit the property market.
‘However, there’s a concern that the Chancellor may just be kicking the can down the road, since it is likely that there will be another rush to complete ahead of the new deadline.
Nigel Purves, chief executive of Wayhome:
The headline-grabbing 95 per cent mortgage policy is politically astute, but it is a band-aid on a bullet wound. The affordability issue for renters goes much deeper than the deposit. Mortgage lenders calculate their lending by multiplying household income – and with the average house price in England coming in at just under £270,000, it means that you’ll need quite a hefty household income to get a 95 per cent mortgage to afford to buy it. If the Government is truly committed to turning Generation Rent into Generation Buy, it must work together with the property industry to raise awareness of innovative ways to help people take their first step onto the homeownership ladder.
Kevin Mountford, co-founder of the savings platform, Raisin UK:
Lenders will benefit from a government guarantee on mortgages for those with a 5 per cent deposit, with many high-street banks offering 5 per cent mortgages from next month. It’s a policy the Government is introducing to breathe new life into the housing market. This will be welcome news for buyers who are struggling to save a 10 per cent deposit throughout the pandemic, and hopefully see more first-time buyers accessing the housing market before the end of the year.
Tahir Farooqui, CEO of private rental platform Canopy:
House prices have become so high that turning ‘Generation Rent’ into ‘Generation Buy’ will take more than an extension to temporary stamp duty tax relief. While the tax holiday has done its job of stimulating the housing market during the pandemic, it has also prompted sellers to up their prices due to high demand. Introducing 95 per cent mortgages will help renters raise a deposit for their first home, but it doesn’t change the fact that securing an affordable mortgage is a pipe-dream for many.
One way to prevent getting stuck in the cycle of renting is to make rental payments count toward future homeownership by contributing to their credit score. Renters spend around £64k before they finally save up to buy their first home, and this is money that shouldn’t go to waste. Open Banking-based rent tracking is already helping people build a good credit score, which is critical to secure a mortgage. Support from the Government to advance affordable financial products may do more to help first-time-buyers than temporary measures to reduce the hefty upfront costs.”
Lee Pickett, partner and housing law specialist at global legal business, DWF:
Whilst this will be welcome news for the housing market, it will also be met with caution as it merely kicks the can of the withdrawal effect down the road a little. We have certainly seen developers concerned about unhappy customers who, through no fault of theirs, would miss out on the SDLT holiday due their new home not being ready for legal completion in time. Equally, various supply chain and labour availability pressures resulting from the pandemic and/or Brexit, are likely to be key factors in developers being unable to deliver homes before expiry of the SDLT concession period.
There is an alternative view that the market was functioning well enough when the SDLT holiday was introduced and it simply pushed up prices, removed the advantage first-time buyers had and reduced tax revenue at time when it is most needed. Perhaps the compromise might have been to distinguish between transactions and chains involving new build properties and those which only involve existing housing stock. That, however is not what the Chancellor has decided to do and perhaps that is to do with simplicity of application among other factors.
Sam Mitchell, chief executive of online estate agent Strike:
Buyers and sellers couldn’t have asked for much more from today’s budget and I’m sure many will be celebrating tonight – or perhaps just breathing a sigh of relief if they’re amidst a sale.
With the stamp duty holiday now running until the end of June, and the nil rate band rising to £250,000 until the end of September, thousands more will be able to benefit from the exemption. Plus, a mortgage guarantee scheme to encourage lenders to lend mortgages of up to 95 per cent will be a massive help to those with little in the way of a deposit.
‘Caution does need to be applied longer term to those looking to benefit from the stamp duty holiday and there is a risk that extending it will lead to people expecting it to be extended again. The same pressure we’re seeing currently will be on buyers and sellers to complete three months down the line – but a smoother transition back to normal rates will at least help to soften the blow for some.
Lending a hand to the property market is a great way of boosting our emptied economy, and clearly the government is sticking to its promise of turning generation rent into generation buy. Today’s announcements will no doubt stimulate feverish demand in the months ahead and could easily create the busiest boom we’ve ever seen.
Kevin Shaw, group managing director of residential sales at LRG:
The Stamp Duty Holiday extension is positive news for both the property sector and the wider economy. In the past year it has been a crucial boost for the UK economy, and the ongoing momentum will certainly help to increase public confidence in the post-COVID recovery.