Today’s fiscal announcement delivered by Chancellor Jeremy Hunt included plans to extend the Mortgage Guarantee Scheme, unlock the delivery of homes through planning reforms and help renters in receipt of local housing allowance (LHA) benefits.
Quiet extension of Mortgage Guarantee Scheme
The extension of the Mortgage Guarantee Scheme was not announced in Commons but was revealed in the Treasury’s Autumn Statement policy paper. The scheme, which supports the availability of 95 per cent loan to value (LTV) mortgages, will now end in June 2025 instead of December this year, making it available for an additional 18 months.
Amanda Aumonier, director of mortgage operations at Better.co.uk said its extension was “commendable” but should be part of a “broader commitment to tackle the root causes of the housing crisis.”
Peter Stimson, head of product at MPowered Mortgages, disagreed and said the decision was disappointing as the scheme was not proven to “be of any substantial benefit to either borrowers or lenders”.
The most recent figures from the Treasury showed that the scheme accounted for less than one per cent of all residential purchase activity since its launch in April 2021 until March this year.
He added: “Our view is that we should really be encouraging targeted segments, such as first-time buyers, to save for bigger deposits and to this extent, a reopening and extension, in terms of the amount you could be allowed to save would have been more beneficial.
“The Mortgage Guarantee Scheme only helps a very small portion of movers, and poses questions as to whether we should be encouraging first-time buyers to take out a 95 per cent LTV loan, in a market in which prices are falling?”
Missed open goal
With speculation that stamp duty measures would be introduced to stimulate the market, some found the proposals ultimately announced to be underwhelming.
Sebastian Murphy, group director at JLM Mortgage Network, said the Chancellor had an “open goal” that he “appears to have missed spectacularly”.
He added: “We have called for a stamp duty holiday for older homeowners who want to downsize but are put off by the large amount of taxation they would need to pay, but nothing of the kind has been proposed.
“Such a measure would encourage older, single people to move into more suitable accommodation while freeing up larger, family homes for those who are moving up the ladder and want these types of properties in order to meet the needs of their families.”
Richard Davies, COO of Chestertons, also said a stamp duty cut would have been welcomed, adding that he regularly saw people who wished to downsize but were put off by the tax.
He added: “We would have also liked to have seen the Chancellor introduce more initiatives to assist young house hunters get on the property ladder. With the cost of living, many are struggling to save up a sufficient deposit or find a property within their budget.
“Last but not least, tenants have been facing rising rents and limited availability of suitable properties. To bring much-needed relief to the lettings market, we would have liked to have seen the Chancellor announce tax incentives for buy-to-let landlords with the aim to boost the number of rental properties.”
Chris Hodgkinson, managing director of House Buyer Bureau, said the market had become accustomed to the government announcing incentives, so the overlooked opportunity was a “shock”. However, he said this was not a bad thing.
Hodgkinson added: “While this will do little to ignite the property market in the short term, it will be beneficial in the long run, provided they actually deliver on their promises.”
Paula Higgins, CEO of HomeOwners Alliance, said she was “glad” to see that Black Friday-style deals such as a stamp duty holiday were avoided, saying this was “sensible” because such measures only added chaos.
Higgins said first-time buyers needed more of a hand up as they raise larger deposits and extend mortgage terms to make homeownership more attainable.
Otherwise, she said there was little help for homebuyers and questioned the plan to unlock housing through planning changes, adding: “Will these houses really be built, be affordable and in places people want to live?”
Although nothing was announced this time around, there is a relief on stamp duty currently in place. Last year, Hunt confirmed that the increased threshold of £250,000 would be maintained until 2025, a revision of the previous Chancellor’s decision to make this a permanent change.
Hunt also announced that planning restrictions would be amended, so homes could be split into two flats more easily and nutrient pollution would be offset so more housing could be built.
JLM’s Murphy said more supply was needed “desperately” and the announced reforms were a “retrograde measure which doesn’t tackle the types of homes people need or want to buy.”
Higgins said she hoped the change would boost private rentals and result in more “right-sized homes”.
She added: “But the government doesn’t have a good track record on extending permitted development rights. The quality element can be missing and is too often not up to standard, as we have seen with these office-to-flat conversions.
“Standards need to be maintained as deregulation in this area does mean a greater risk of bad conversions.”
Paresh Raja, CEO of Market Financial Solutions, said this would be welcomed by some landlords “but more detail is required”.
He added: “Meanwhile, a more drastic overhaul of the planning system seems to have been abandoned, which feels like an important oversight.”
More up the Chancellor’s sleeve?
Some theorised that the Chancellor could be waiting until later to announce policies for buyers and sellers.
Tomer Aboody, director of MT Finance, said Hunt “might be holding back some further help, particularly for the property market, until his next budget”, adding: “This would provide a further boost to the economy and potentially offer a last chance to increase support before the general election.”
“Overall,” Aboody said: “This was a positive statement which will hopefully help the many.”
Nick Leeming, chairman of Jackson-Stops, said the minimal attention to the housing market provided an “important platform for the new Housing Minister, the second in less than a year, to make a difference to the property sector”.
Mark Harris, chief executive of SPF Private Clients, added: “A more fluid housing market is good for the economy and more needs to be done to stimulate activity.
“With one more Budget in the spring and possibly another Autumn Statement before a General Election, the Chancellor may be keeping his powder dry on the housing market, but we urge him to take action next time around.”