Property industry reaction to 2013 budget

Property industry reaction to 2013 budget

George Osborne’s spring 2013 budget included new measures to help more people purchase their own homes and this news has been generally welcomed by property industry professionals.

The Chancellor of the Exchequer firmly believes that the measures announced in the spring budget will provide a major boost for the UK economy, despite calls for an economic U-turn from the Labour opposition.

Mr Osborne told the press that there were far more difficult decisions still to be made regarding the nation’s spending in order to get the overall deficit down, however, the government are taking measures to help people buy their own home.

The Chancellor announced that the FirstBuy scheme which was aimed at First-Time Buyers (FTB) on an income of up to £60,000 (GBP) per year, is being replaced with a ‘Help to Buy’ equity loan scheme available to all buyers looking to purchase a new build home up to a value of £600,000 (GBP), with a deposit of just 5%.

A new mortgage guarantee scheme was also announced during the spring budget, which extends the previous NewBuy Guarantee initiative to include older residential properties as well as new-build homes, which he hopes will result in a sharp rise in lending to potential homebuyers, thus kick starting an upturn in the UK property market. The new scheme will start in January 2014.

Buy to let mortgages are not going to be included under the new scheme, however it remains unclear if existing property owners will be able to purchase property without selling leaving them with an income producing property asset when they offer their old home for rental.

The response from property industry professionals*

Sue Foxley, Head of Research at Cluttons, said, “An ongoing commitment to the Funding for Lending scheme and the announcement of the Help to Buy scheme are welcomed, but in London and the highly restricted residential areas in south east, an increase in funding in the absence of new supply can only result in price rises well ahead of earnings. Therefore, in parallel, the local planning politics in the Home Counties in particular that are holding back residential development must be addressed. The Chancellor noted the ongoing reform of the planning laws but to date there has been little sign of delivery.”

Ed Mead, Director at Douglas & Gordon, commented, “With VAT on refurbishment and SDLT remaining unchanged, it may seem churlish to decry any form of support for the property market, but the fact is that the Help to Buy scheme is simply an alternative mechanism to boost use of the funds in the under-performing Funding for Lending Scheme.”

Peter Gallanagh of Campbell Dallas said, “This is a really exciting announcement. People want to move and they want to buy property and this will help those looking to upgrade their home as well as those getting on the property ladder for the first time.”

Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), commented, “Today’s mortgage guarantee announcement should provide the extra boost that’s needed to accelerate lending for house purchases up the loan to value scale. It will relieve a real headache for anyone struggling to fund a deposit for a home, and should help to boost confidence in the market at a time when house prices are beginning to rise.”

Peter Wetherell, Founder and Chairman of Wetherell Mayfair Estate Agents, commented, “It has taken us 12 months to digest the March 2012 budget, so thank goodness it appears that there are no surprises this year for the property industry, only positive. The market has now returned with confidence in prime central London for both locals and internationals boosted by a cheaper pound. The top end of the market will now hopefully be joined by the core market as the Chancellor’s Budget assists mortgage liquidity alongside his bitter tax cut.”

Philip Hogg, Chief Executive of Homes for Scotland, said, “The far-reaching benefits associated with home building are well recognized so we obviously very much welcome the focus, long overdue though it may be, given in today’s Budget, with the key points of the Chancellor’s Help To Buy initiative being a £3.5bn boost to shared equity schemes in England and a guarantee to support £130bn of mortgage lending across the whole UK housing market, which we believe are likely to have a major positive impact. The Chancellor today demonstrated that he understands the difficulties facing home buyers and our industry, and that he is prepared to act to address them in order to break out of the current economic deadlock. We have been calling for enhancements to the Scottish government’s shared equity scheme for some time and now urgently need an equivalent commitment north of the border to ensure that households right across the UK enjoy similar support and Scotland is not disadvantaged in relation to attracting investment.”

James Pargeter, Head of Residential Projects at Deloitte Real Estate, commented, “The main emphasis is on homeownership being maintained as the key driver of the housing market. The new ‘Help to Buy scheme’ is an extensive set of measures to boost demand for home purchases. The Mortgage Guarantee scheme’ is a welcome boost to both the house building industry and developing affordable housing providers as, by stimulating an increased level of demand certainty, it should allow housing supply to rise. Existing schemes with planning consent, but which lack current financial support, should have a better chance of being able to commence and to be built at a quicker rate as a result.”

Jon Neale, Head of Research UK at Jones Lang LaSalle, said, “While the budget was relatively low-key, there are some snippets of good news, particularly for the residential sector and the regions. Firstly, the Government confirmed that capital spending will be increased by £3bn per year, most of which will be channelled into infrastructure. This will hopefully translate into rail, road and rapid transit schemes – as well as energy-related projects – that could have a very positive impact on regional property markets. The problem with these schemes is they are, by their very nature, limited in scope and therefore they don’t, in themselves, solve the problems that some of the less fortunate buyers have.

Peter Girling, Chairman of Girlings, commented, “Today’s budget brought a surprising boost for the housing sector. The new ‘Help to buy’ scheme will help those currently unable to raise sufficient deposit to secure a mortgage. The government plans to invest £3.5bn pound in shared equity loans and offer anyone with a 5% deposit, an equity loan of 20%, tax free for five years, providing they are purchasing a new build house with a value up to £600,000. The loan will be repaid on the sale of the value of the house. The move has already been welcomed by house builders with a rise in shares in many of the leading building companies.”

Mark Clare, Chief Executive of Barratt Developments PLC, commented, “This is a major boost for homebuyers and house builders. Over the last five years high deposits and limited availability of finance have combined to lock many people out of the housing market. This is an important step towards addressing these issues and meeting the housing needs of the nation. It will also be a major boost to the economy – every additional home we build creates two new jobs. We are now gearing up to meet the increase in inquiries that we expect to see.”

* Source: JungleDrum

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