The recent budget released by George Osborne was a mixed bag for housebuilders. An increase in SDLT for second homes and landlords could potentially slow down the surge we have been seeing in the property market, but the introduction of the new lifetime ISA and reforms to planning procedures may counteract this by encouraging people to buy homes, who may not have previously considered it a possibility.
We have enjoyed an affluent market recently. An influx of sales before the 3% increase in buy-to-let stamp duty means that we will likely experience a decline in movement to come. The fear is that the this Stamp Duty rise will increase rent prices and therefore hinder people’s ability to save for a deposit, negatively affecting the bottom rung of the market.
However, the chancellor’s news of a new lifetime ISA for people under 40 has created a surge in shares for housebuilders, as the Isa can be used to purchase a house. The government will provide 25% on top of whatever funds you have in there, up to £1,000 a year. Along with this, the ISA limit has been increased from £15,000 to £20,000, which will be music to savers and housebuilders ears, as more and more people will be able to afford a deposit for a home.
The red tape in the planning process was also addressed. In an attempt to simplify and make the procedure more streamlined, measures have been introduced to speed up the planning process by reducing the number of stages developers have to go through to gain permission, thereby encouraging new applications.
Along with this positive step is the announcement of a new Land Fund that will help pay for the cleaning of brownfield sites. The sites will be used to support the pledge to build 30,000 starter homes for first time buyers. It is predicted that this measure will help ease the high demand for homes, as there will more to go round.
Clearly it has been a mixed budget, and only time will tell if these new benefits will outweigh potential house price increases. However, at Wedgewood we feel there are enough positive Government initiatives in place to feel optimistic about the short-term future of the housebuilding market.