If you are to believe some of the market commentators peddling their trade at the moment, the chances of any sort of U-turn on the recently introduced stamp duty taxation measures are slim in the extreme. My view is that, while they might be correct, it shouldn’t stop you asking for them.
That’s certainly been the approach we at the CA have taken over the past few weeks when looking ahead to next month’s Autumn Statement – the first to be delivered by Philip Hammond. Judging by his speech to the Conservative Party conference earlier this month, we shouldn’t expect much in the way of a grandstanding, barn-storming delivery with fireworks flying across the chamber. Quite the opposite I suspect. Whatever you think about Hammond, I’m sure you’d agree he’s probably the polar opposite to George Osborne.
In a very true sense this has to be a good thing, because our view is that the measures introduced by Osborne, coupled with the EU referendum vote, have resulted in a significantly downbeat housing market, one where transaction levels are nowhere near where we’d like them to be.
The impact on purchase activity has been noticeably pronounced. This is not just in terms of the obvious fall in buy-to-let transactions, but across the board as people have adopted to take a wait-and-see attitude post-Brexit.
As we know the summer months tend to be less active, however (anecdotally at least) our members are telling us that case levels remain subdued, with pipeline activity not seeing any noticeable uptick in the future. This market situation doesn’t of course just affect conveyancers, but every single stakeholder in the housing and mortgage markets. This is why we took the decision to speak out and ask for change.
When you think of political U-turns you can’t help recall Margaret Thatcher and her: “You turn if you want to. The lady’s not for turning”. This tends to suggest that U-turns are rare, however recently this hasn’t been the case at all. Indeed some of George Osborne’s policies announced in Budgets or Autumn Statements appear to have been withdrawn even before he’d sat down from the Dispatch Box. We tend not to be in a political environment where politicians stick steadfastly to bad decisions for fear of being seen as ‘weak’. There is more credibility to be gained by admitting a mistake and making the necessary adjustments.
This is why we are urging Philip Hammond to acknowledge the mistakes of his predecessor and the damage it has caused. Back when the stamp duty changes were introduced a Leave vote didn’t seem a serious possibility and therefore Osborne’s 3% increase for additional properties might not have been so badly exacerbated by the increased uncertainty. However this scenario has now played out and the boost that would be given to the market by withdrawing the 3% extra charge would be significant. Going back on the mortgage interest tax relief would also be a considerable positive and again would provide landlords with further incentives to remain active. Incentives that are simply not there at the moment.
The experiment of hitting buy to let in order to boost first-time buyer numbers is failing and we believe the government would be far better focused on increasing supply, rather than further dampening demand. Some would call this a shot in the dark with little chance of success but, in my experience, if you don’t ask, you don’t get. It’s time for Hammond to make the break with his predecessor and determine a brighter future for the housing market.