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Budget 2018 was a ‘damp squib’ for housing market – Marketwatch

  • 31/10/2018
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Budget 2018 was a ‘damp squib’ for housing market – Marketwatch
Chancellor Philip Hammond loosened the purse strings as set out his spending plans for the country in the 2018 Budget.

The issue of housing didn’t go unnoticed with further measures aimed at improving supply and helping people into ownership.

But did the chancellor do enough?

We asked this week’s Marketwatch panel for their verdict on the 2018 Budget and its impact on the housing and mortgage market.


 Gemma Harle, managing director of Intrinsic mortgage network

Damp squib and wet weekend are just some of the phrases which spring to mind when thinking about this year’s Budget in relation to housing.

Some of the announcements frankly will have little to no impact on the housing market in the short term.

First and foremost, the stamp duty relief announced for those buying their first home through a shared ownership scheme up to a cost of £500,000 will simply not benefit many additional first-time buyers.

Statistics from UK Finance show that the typical loan size of a first-time buyer in August is £145,495, showing that this group can already take advantage of last year’s cut to stamp duty, making this new relief pretty inconsequential for the majority.

Meanwhile, housebuilders will be rejoicing at the news that Help to Buy has been extended, as the scheme has helped to inflate their share prices.

Whether everyone else will be as happy is not necessarily a dead certain.

There has been a lot of criticism levelled at the scheme including that it has created a number of mortgage prisoners.

There are reports that those who first took advantage of the scheme five years ago are now finding that, when remortgaging, they find themselves trapped paying an expensive variable rate mortgage with few options from lenders elsewhere.


headshot of Foundation Home Loan's Jeff KnightJeff Knight director of marketing at Foundation Home Loans

There were several points that stood out in Budget, such as the announcement of changes to lettings relief, which will impact accidental landlords.

However, the suggestion is that this will impact only a small number of landlords.

There was some good news with the bringing forward of the change to the higher rate tax threshold, which should see some intermediaries’ clients being able to afford larger loan sizes.

And then there were schemes to help stimulate the construction of new homes, which has been part of so many budgets in the past.

However, we need a lot more than just financial pledges.

We all know more homes need to be built, but it is not that simple. We have sufficient skills and sufficient supply of labour.

But ironically, a labour shortage, combined with a demand for more homes, will create a wage-push increase in the cost of the new homes, which goes against the objective of more affordable housing.

There is still the issue of where to build the homes and the additional supporting infrastructure that will be required.

Everyone knows we need new homes, but no one wants them built in their back yard and there are environmental issues in building on more green-built sites.

So for this to work, it needs joined up policies.

All that remains to be seen is if this turns out to be the last Budget before Brexit happens.


Aaron Strutt, product and communications director at Trinity Financial

The Budget has had some mixed reviews, with the promise to end austerity with giveaways and tax reforms.

It’s hard to say that it was particularly favourable for the mortgage or property industry, apart from the new build sector.

New build brokers and developers will be pleased the Help to Buy Scheme is being extended, but they will need to make plans for life after March 2023 when it finishes.

The difficulty for the chancellor is that he does not know how Brexit will play out and unfortunately that does not breed confidence in the housing market.

The purchase market is reliant on positivity and many people are not willing to take unnecessary risks.

There is good news for first-time buyers purchasing shared ownership homes up to £500,000 as stamp duty has been abolished on additional stair-casing, so this is positive for the new build industry.

Many brokers, particularly in London and the South East, will not be so keen on the government’s proposed 1% stamp duty surcharge for non-residents buying property in England and Northern Ireland. There will be consultation on this measure in January 2019.

There has not been much thought about getting older people to downsize without paying stamp duty to free up the larger homes and get the market moving.

Many buyers will also be disappointed the tax hikes for second property owners and buy-to-let have not been scrapped or lowered.

I wonder if these potential tax changes are being saved for a rainy day and they are part of a wider plan to be reduced if the market slows in the coming years – if they are reversed they would boost property sales and the market.

The chancellor has announced a further £500m for the Housing Infrastructure Fund, designed to help get an additional 650,000 homes built.

This is something that continually comes up and is a permanent problem with the lack of new and affordable homes.

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