Chancellor’s Budget Highlights Recovery in Housing Market
Lack of property headlines in the 2014 Budget shows government’s confidence in housing market recovery.
The announcement of the Chancellor George Osborne’s budget yesterday lunchtime lacked any major headlines concerning the property sector. The much muted reduction in Stamp Duty was avoided whilst the extension of the Help to Buy Scheme until 2020 was already common knowledge within the industry.
The major talking point in the housing sector came from what the chancellor did not announce, rather than what he did. Many property professionals including estate agents and mortgage lenders had called for the Chancellor to review the Stamp Duty tax structure which they feel is outdated and is negatively affecting the housing market. Currently Stamp Duty is implemented at 1% on homes purchased for over £125,000 and rises to 3% for properties between £250,000 and £500,000. With the average house price currently standing at £170,000, prospective buyers are faced with a £1,700 bill.
Despite the obvious disappointment shown by property professionals following the chancellor’s avoidance of their wishes, there may be cause for optimism in his decision to do so. The fact the chancellor has seen fit not to review Stamp Duty could point to his confidence in both the housing market recovery thus far, and more significantly, the sustained projected recovery in the coming years. Whilst the effectiveness of the well publicised Help to Buy Scheme is still being debated, what is now far less debatable is the overall recovery of the housing market.
With property professionals reporting widespread growth can the Chancellor be criticised for not ‘rocking the boat’ with too many policy changes?
Lloyd Davies, Managing Director at Convey Law Property Lawyers commented:
“The UK housing market as a whole has certainly shown strong, encouraging recovery signs, particularly over the last 6-12 months. The Help to Buy Scheme, alongside more general confidence in the market has led to a sustained increase in transaction levels compared to the last two years. I would not say the market is booming just yet but certainly expanding at a level that would point to sustainable growth over the next 5 years.
“Whilst the reduction of Stamp Duty would very likely benefit the market in the short term, there is no indication that this is required in order for the UK to enjoy a return to a successful and prosperous housing market.”