Three Things on my Mind

With the housebuilding industry getting back on it’s feet after lockdown there is plenty to talk about. Here are three things on my mind and I would love to know your opinion. 

Firstly, there is a cut in SDLT making property purchases up to £500k tax free. Clearly the chancellor is trying to stimulate the property market with a greater impact outside of the South East given the lower property prices in the remainder of the UK. 

For a house purchase at the top of this £500k limit it would offer the buyer a saving of £15,000, definitely significant, but for an average priced property in Scotland (£152k), for example, it would only provide a saving of £540. Given the progressive nature of the SDLT the tax break is far more compelling to those nearer to the £500k ceiling than for average or lower priced home purchases.

Any incentive to buy a house is good news for the industry but how impactful do you think this will be in terms of unlocking chains and getting new customers to your sites?  

Secondly, the elephant in the room is the end of the help to buy scheme which has underpinned house builders performance since it’s launch in 2013.

The scheme doesn’t end until 2023 but significant restrictions come in to force next year. Specifically, it will be limited to first time buyers and be subject to regional price caps, therefore making getting a mortgage much more of a challenge for certain buyer groups and reducing the number of properties on which a help to buy equity loan is available. 

In light of the economic impact of Covid 19 does the government need to step in and extend the current version of the scheme to help sustain the housing market?

Finally, it’s widely accepted that the fortunes of the housing market are inextricably linked to mortgage availability, cost of borrowing and levels of employment. Currently, there are still a number of high LTV mortgage products on offer and the base rate is just 0.1% so how about employment?

Technically, it’s still good but there are over 9 million UK workers on furlough. As the scheme tapers out in early autumn how many of the furloughed workers will have jobs to return to? Will the government’s myriad of loans, grants and furlough be enough to stop unemployment climbing steeply and keep buyers confident enough to purchase a new home?

If you have an opinion on any or all of these topics, let me know via simon@edburydaley.com. Your response will be treated in strict confidence.