“If I were chancellor…”
As the dust settles on Philip Hammond’s latest Budget, Andrew Turnbull, managing director of Wellesley Group, explains how a property-friendly Budget might look…
THE 2018 BUDGET held few surprises. But one theme was noticeable by its absence – there was very little news for property developers, borrowers and lenders.
“This wasn’t really a property Budget,” says Andrew Turnbull, managing director of Wellesley Group.
Turnbull describes the 2018 Budget as having been “broadly neutral” for marketplace lenders who focus on the property sector. But he has some suggestions on how the Budget could help property lenders and borrowers alike.
Stamp duty
Chancellor Philp Hammond stated that there would be a consultation on increased stamp duty for foreign buyers. But while Turnbull admits that it would be easy to increase taxes for foreign owners of expensive houses, adding that “it would be a good idea politically”, he is not convinced that it is in the best interests of the country as much foreign capital supports the building of lower-cost housing.
“The overseas capital that is flowing into our regions supports a lot of the development that’s occurring,” he says. “These foreign investors are actually supporting the sale of smaller flats and houses that are then being rented out to local renters.”
Turnbull suggests that an overall reduction in stamp duty would be “a shot in the arm” for the higher end of the housing market.
“If I were chancellor, I would probably be hiding that in my back pocket because it really would act as a stimulus if they were to reverse that,” he adds.
Help to Buy
“The extension of the Help to Buy scheme is very welcome,” says Turnbull. “I think many house builders and lenders will be happy about that extension.
“But one concern that we have been focusing on is how to wean people off it. When that does happen, Hammond is going to have to choose his timing carefully to make sure it doesn’t have a significant impact on the economy and the housing market.”
Personal allowance
Turnbull adds that the increase in the personal allowance (from £11,850 to £12,500) should encourage more people to buy property.
“Developers tend to create housing for people who have middle incomes and that’s quite a significant difference for them,” says Turnbull. “Essentially what it really comes down to is the ability to afford mortgages.”
House building
Last year’s Budget promised to fund the creation of 300,000 new homes across the UK. But this year, there was scant mention of house building initiatives.
Turnbull says: “We want to see an increase in housing stock in the UK because there’s a lot of discussion about improving planning permission and the process that developers have to go through there.”
Brexit
Ongoing uncertainty over Brexit presents a potential problem for the UK’s property market, according to Turnbull.
“One of the things that lenders really don’t like when supporting projects is fluctuating housing prices,” he says. “For lenders, stable prices are important. They’re very happy with housing prices that remain flat.”
His ideal Budget would have included some reassurance for investors, should Brexit create economic insecurity.