Property Industries Reaction to Philip Hammond’s Second 2017 Budget
Welcome to the property industries response to Philip Hammond’s Autumn 2017 budget. Every year we publish the property market’s reaction to the autumn budget, taking a 360 view, asking a thought leader from different property sectors to give their opinion.
Russell Quirk, Founder and CEO
“This budget has amounted to little more than the annual dose of rhetoric and empty announcements of bold plans, extolling a robust intent to build more housing.
The Treasury’s ‘pledge’ to build more homes is a story we’ve been told many times before, but these well-worn, heady platitudes have not been fulfilled since way, way back in 1969 when the Beatles were topping the charts.
The Government must actually execute on a housing plan if the current housing crisis is to be remedied and not just grab headlines with their unqualified so-called intentions. This problem is not just about money. It’s about action and it’s about listening to experts within the industry for once.
A cut in stamp duty for first-time buyers is the only real sign of good intent by Chancellor Hammond and one that may help reignite the property market momentarily, but some may say acts as yet another diversion from the elephant in the room of a continued failure to build a meaningful number of affordable homes. Indeed a cynical electoral bribe.”
“Despite the budget deficit falling in September by c.11% and being at its lowest for 10 years, it is still likely to be in excess of £50bn for 2017-2018, affording “fiscal” Phil little opportunity for anything too dramatic in today’s statement. Hammond has made a new name for himself as “frugal” Phil was born and some of us had ‘Déjà vu’ of the Osborne years. Whilst SDLT changes will hit the headlines and stimulate a bit more activity in the housing market, the glaring omission to radically revise business rates and to continue to kick reform down the road will leave many businesses particularly retailers facing real challenges in paying their bills in 2018. Retailers are already facing the prospect of the ‘perfect storm’ caused by: changing shopping habits, stagnant wage growth, rising prices and increasing costs to run a business. Hammond’s decision to switch from RPI to CPI for calculating business rates still hasn’t gone far enough to address the immediate concerns of many businesses, particularly those within the retail sector. The switch has only led to a reduction in the rise in business rates by 0.9%, which many retailers will still struggle with during the difficult economic climate.
Whilst the government’s recognition that investment into improving the UK’s productivity will be a key driver of economic growth, I am not sure that the immediate and glaringly obvious solution is to plough millions into driverless car technology. The slowdown in the retail sector, coupled with rising business rates is hurting the town centres. The government should see this as an opportunity to invest in obsolete town centres in order to revitalise local economies. These prime positioned assets often owned in full or part by local authorities could provide long-term productivity growth through having centrally located education, assisted living and healthcare services. At a time when spending cuts are rife and schools are having to ask parents to provide pencils due to lack of funds, something must be amiss if priority is given to the implementation of driverless technology.”
Alan Townshend, Group Development Director
Southern Housing Group Limited
“After so much anticipation about today’s autumn announcement, the Chancellor’s budget has certainly played it safe and, while the devil is in the detail, it seems, at first glance, to be a bit of a “damp squib.”
The highlight for me was the additional £2.8bn of funding for the NHS, although even this is a deficit on the £4bn sum that professionals have identified as the minimum amount needed to get the service out of the hole it’s currently operating in.
The increase in Living Wage seems to be a positive, although when you analyse it, it represents a 4.4% increase on the existing figure. With inflation at 3.9%, this new figure won’t really make any difference to those most in need, so in real terms employees won’t see any real benefit.
The housing element of the budget was overall a bit disappointing; without seeing the detail it’s difficult to see whether the £44bn investment in housebuilding is “new” money and this raises other questions; is it coming through to affordable rent, is it London-focused (one of most difficult areas for affordability)? Additional money is always welcome of course but for housing this could, in theory, mean more on home ownership rather than affordable housing… We need more than an additional £2.7bn on infrastructure to help difficult brownfield sites, and although there was a lot of noise around planning and building upwards, it was disappointing to see nothing mentioned about change in planning regulations.
A lot of noise has been made about stamp duty and although the abolition of stamp duty for first time buyers of homes valued up to £300k is a great positive which I am very pleased to see, when you look around (particularly in London and the South East), most first time buyers are buying homes over the £300k threshold. I would have welcomed the abolition extended for those wanting to trade down, freeing up family homes for people that need them most; unfortunately stamp duty restricts a lot of home owners from being able to do this. Why can’t it work both ways?
With the resounding message that there will be “no additional borrowing,” this is still an austerity budget based on deficit resource management rather than additional resource delivery into the services we hold dear. It’s a “safe” budget and I wouldn’t be surprised if this is the last dance for Chancellor Phillip Hammond and the budget box.”
Ruth Barnes, Partner, Head of Department – Residential Development Sales
“I am sure that the Stamp Duty holiday for first time buyers will be very welcome news across the sector and will no doubt stimulate that end of the market. I am pleased to see that there has been no increase in the Stamp Duty surcharge on additional properties as had been feared by many.
There has of course been much talk for a long time about the number of new homes that need to be built and various goals have been set by various stakeholders. Whether the support pledged will help achieve this latest goal (particularly in the short term) remains to be seen and as always the devil will be in the detail.”
Alex Holden, Managing Director
“Although a winner for younger voters, given the government mantra has been focused on fixing the broken housing market, Phillip Hammond has delivered a budget that has done little to resolve the underlying issues.
After such a difficult election and an embarrassing U-turn earlier in the year, unsurprisingly his first budget since losing a Commons majority focuses on winning support from key voter demographics, bridging the generational gap rather than addressing post-Brexit uncertainty and recognising the market-wide impact of former tax reforms.
The impact of this budget on the prime and super-prime market is at most a small token of reassurance that Britain, and London particularly, is still a global power and continues to be a highly attractive destination for foreign investors and Britain’s alike. Despite the current uncertainty around Brexit negotiations, Phillip Hammond needs to create confidence and start shaping Britain’s post-Brexit economy, and as a result it would have been good to see more aggressive measures towards improving long term productivity which will safeguard the economy as we navigate a post-Brexit era.”