Chancellor Hammond shared one of the Autumn Statement’s surprise measures in advance of his big day out with the red box, and it wasn’t a particularly welcome one for lettings agents, as he outlawed up-front agency fees to tenants “as soon as possible” (albeit pending consultation).
There was further – if not unexpected – disappointment about a lack of re-reform of the now “punitive” stamp duty regime for high-value homes, but some welcome and very business-friendly spending nubs and policy tweaks to get infrastructure (including super-fast broadband and a “transformational tech corridor” between Oxford and Cambridge) and house-building moving.
Here’s what some of the most major players in the prime residential space made of Hammond’s first, but the last ever, Autumn Statement:
- On the abolition of letting agency fees to tenants
A welcome recognition of the importance of the private rented sector
Tim Hyatt, Head of Residential Lettings at Knight Frank
“The private rented sector forms an important part of the UK housing market and the engagement from the chancellor in today’s Autumn Statement is a welcome sign that it is recognised as such. Letting residential property is a highly regulated activity and as with any reform a review of the detail will be important. We have long supported the regulation of lettings agents which will entrench best practice across the sector, and we believe that measures to improve the position of tenants should be introduced in a way that supports the growing professionalism of the sector. With a rising number of regulations and legislation governing the sector it is important that the role of qualified, well trained and regulated lettings agents is recognised and the need for fees to cover their work to protect both tenants and landlords is understood.”
This legislation is short sighted and is yet a further challenge to landlords
Nick Leeming, Chairman at Jackson-Stops & Staff
“While the announcement of the abolishment of lettings fees appears to be good news for renters, experience shows that any savings to the tenant will likely be passed on to the landlord who in turn could then pass them back on to the tenant through increased rent as they seek to cover their costs. This legislation is short sighted and is yet a further challenge to landlords who have faced a barrage of increased costs over recent months, including the additional 3% SDLT levied when they purchase a rental property and also the abolishment of mortgage interest rate relief which is set to commence in April next year.
“While the ban on lettings fees still requires a Government consultation before it is implemented, its impact on the UK housing market could be far reaching. Affordability issues which surround purchasing homes means that for many, the only option is to rent. We’ve seen a consistent reduction in the number of landlords buying investment properties since April this year which means that fewer rental properties are now coming on to the market to serve the growing rental population.
“A better solution would have been to create a more competitive fee environment and ensuring that landlords are not further discouraged from the market.”
A more positive move would have been to regulate these fees
Islay Robinson, CEO of Enness Private Clients
“The announcement that letting agents’ fees will now be the financial responsibility of the landlord, rather than the tenant, is not welcome news and creates a false economy. Not only will it deter investors from entering the buy-to-let market, leading to a reduction in much needed stock levels, but the tenant will be unlikely to benefit from this ‘saving’ in the long run.
“Would-be landlords have already been discouraged from entering the market, thanks to the extra 3% stamp duty incurred on buy-to-let properties and reduced tax allowances, and this is a move which further deters this type of investment. With home ownership still a key issue and unattainable by many, we should be encouraging this type of tenure, not attacking the market further.
“Furthermore, this will not be a saving that the tenant sees in the long run. They will incur this additional cost, albeit not upfront, because the landlord will likely increase rental values in order to cover this fee.
“A more positive move would have been to regulate these fees, ensuring fairness across the board, rather than simply shifting the charge to landlords.”
The Chancellor has clumsily pushed up rents
Becky Fatemi, Managing Director and founder of Rokstone Properties
“In the name of helping JAMs – Just About Managing Brits – the Chancellor has clumsily pushed up rents. Although some kind of regulation is needed to prevent lettings agents from charging disproportionate sums for the smallest of administration tasks, by switching the burden of lettings fees from the tenant to the landlord Hammond is lumbering the property owner with yet further crippling costs. This will force up rents on an ongoing monthly basis, which will inevitably cost more than a one-off lettings fee.
“Any profit for the landlord is already being squeezed. He / she now has to pay an extra three per cent in stamp duty when purchasing the asset and, as of April 2017, any interest rate relief for those in the higher earning bracket will be scrapped. These factors, in combination with additional letting fees, will drive landlords to push up rents and destabilise the market.
“There are bigger market factors to consider. Not only does this hurt tenants on a monthly basis but it will prevent many from saving for a deposit on a house and therefore goes against Philip Hammond’s promise to address the home ownership dream which for many is now out of reach.
“In addition, since the hike of stamp duty above £937,000 and the cooling market, many potential sellers decided to rent out their properties instead of selling them. Another cost to the landlord will deter this transition. This is a further factor contributing to stagnation in the UK property market.
“In an Autumn Statement that professed to address the housing supply crisis it may also deter wannabe landlords from entering the market, reducing the number of decent rental homes up for grabs. It’s disappointing that the Government did not announce the direct and substantial supply of more homes (above and beyond the 140,000 in total) rather than make such token gestures as the ban on lettings fees.
“In the fine print, the Government has said it will consult on this matter. It is vital that Hammond considers the domino effect of his actions in the property market.”
The Lettings Sector is a low margin business, where you do a great deal of work for precious little fees
Trevor Abrahmsohn, Managing Director of Glentree Estates
“The reference to abolishing lettings fees for tenants is interesting and a typical ‘crowd pleaser’, but I am not sure that this will make a great deal of difference to the functioning of the Industry. Frankly, it is already ‘riddled’ with ‘suffocating’ and unnecessary regulation, and is reminiscent of an inept medical surgeon claiming that the ‘operating technique was a text book procedure, but the patient unfortunately died’.
“The Lettings Sector is a low margin business, where you do a great deal of work for precious little fees which are adequate at best and certainly not largesse. The Lettings Agent is invariably burdened with all manner of legislation concerning money laundering, immigration/Right-to-Rent checks, appliance tests (which includes gas and electrical performance certificates), licences for HMOs, Tenants Deposit Scheme, etc., etc.
“The Agent effectively does the government’s work for them, without being paid and surely they do not need any further restrictions placed upon them?”
Scrapping letting agency fees is surely at odds with the government’s goal to promoting a healthy rental market
Ian Thomas, co-founder & CIO of LendInvest
“Scrapping letting agency fees is surely at odds with the government’s goal to promoting a healthy rental market. Landlords will be squeezed from yet another angle, while many tenants will eventually foot the bill.
“Letting agents should be expected to account for the fees they charge, not pass the cost of the work they do to landlords.
“The government cannot drive forward its strategy for productivity if it doesn’t create a mixed-tenure property market that’s truly fit for purpose. Until we fix the housing crisis, nurturing a healthy rental market is as important as helping more people to own their own homes.”
These costs are minimal over the term of a year’s tenancy so they won’t make a huge difference to the overall yield/costs that a landlord bears on a property
Camilla Dell, Managing Partner of Black Brick
“The government wants to be seen as helping those who need to rent by banning lettings fees to tenants, however, it’s likely that landlords will simply pass this cost on through increased rents.
“In reality, these costs are minimal over the term of a year’s tenancy so they won’t make a huge difference to the overall yield/costs that a landlord bears on a property. However, by implementing further red tape such as ‘right to rent’ checks on to landlords, and now insisting they have to pay for them, it seems like government wants to have its cake and eat it.”
We actually think this could be a good opportunity for us
Ali Carter, Head of Lettings at Russell Simpson
“Firstly, to dispel a few myths, the Letting Agency Fees are in place to cover the cost of drawing up a tenancy agreement. This cost is split between the Tenant and Landlord. The tenant will also be charged a fee for their reference check.
“In terms of today’s announcement of changes to upfront Lettings Fees, we actually think this could be a good opportunity for us, as well as other agents, to say that they are no longer charging an administration fee (it is usually £150 plus VAT) from today! We are a progressive company, with our fingers on the pulse of what tenants are looking for. In fact, quite often we will promote a particularly property with a NO ADMIN FEE tagline. In general we don’t charge the Landlord’s their portion as they are paying us a fee already so we’ve always felt it was unjustified to ask for anything else on top. Overall, we’re quite in line with Mr. Hammond’s thinking.”
Some agents have been overcharging for their gain and to the detriment of tenants so the Government has now acted
Lucy Morton, Head of Agency at JLL
“Charges made by letting agents to tenants at the commencement of their tenancies should have been levied only to cover reasonable administration and referencing costs. However this has been abused by some agents who have been overcharging for their gain and to the detriment of tenants so the Government has now acted and banned letting agents from making these charges.
“Reasonable charges including referencing costs may now be charged to landlords which in turn may then be added to the annual rent. It is essential that agents do not cut corners and fail to carry out stringent referencing checks.
“At JLL and W.A.Ellis, we have always advocated complete transparency of all charges made by agents to both landlords and tenants.”
Agents and landlords will simply recoup the cost by raising rents
Vidhur Mehra, Finance Director of Benham & Reeves Lettings
“In recent years, the lettings industry has been performing a role that really should be performed by the Home Office, the Treasury or even the Financial Conduct Authority. The Government is asking us to conduct investigations on their behalf but then disincentivising us by asking us to absorb the cost. The Government can’t have it both ways. As has happened in Scotland, agents and landlords will simply recoup the cost by raising rents.”
This is set to end the medium-earning, single unit landlords
Lisa Simon, Head of Lettings, Carter Jonas
“The Autumn Statement is set to exert further pressure on landlords. With lettings agents shortly to be banned from charging fees to tenants, yet an unwavering £200 average cost attached to the start of every tenancy to ensure the property is ready for market and meets the heavy statutory requirements now in place for letting, landlords will inevitably bear the additional fees.
“This is set to exacerbate the current plight of the buy-to-let market, which is already reeling from the recent influx of government legislation, and is set to end the medium-earning, single unit landlords who have elected to invest in property either to generate income or supplement their pension. With savings earning so little in the bank, many have been looking for small capital gains, but simply don’t have the means by which to grapple with the additional 3% SDLT levy, the tapering off of tax relief, and the end of the 10% tax relief on wear and tear costs.
“The buzz word of the moment is PRS and, with government legislation exerting such pressure on an average landlord, we are likely to surrender a large proportion of the buy-to-let market to big corporates – much like in Spain and Germany, where PRS is dominant.”
Landlords can only raise rents so far
Mark Harris, Chief Executive of SPF Private Clients
“The removal of fees for tenants could potentially be further bad news for landlords who are already being hit from every side with the reduction in mortgage interest tax relief and higher stamp duty on purchases. It is yet another thing for new landlords to think about – will they face higher costs? They can only increase rents so far.”
We welcome any move by the government to help improve the transparency of tenant’s fees
Richard Davies, Head of Lettings at Chestertons
“We charge our tenants a tenancy agreement fee – which has remained unchanged for over three years – to cover the complex work required to negotiate and draft tenancy agreements that often include unique and complex clauses inserted at the tenant’s request for their protection.
“We are supportive of any regulation that prevents a small number of rogue agents from charging tenants extortionate fees, but we also believe that passing the fee onto landlords will simply see those landlord’s increasing their rents in response, therefore making no real different to tenants.”
“Chestertons recently surveyed its tenants and found that 91% believed that paying a tenancy arrangement fee is fair. The actual charge they believed to be ‘fair and reasonable’ varied dramatically from nothing to £500, but the average was £147.
“Our survey also found that there was a huge amount of confusion over what actually constituted a ‘tenant fee’, with 31% of respondents believing that the tenancy deposit counted as part of the Tenants Fees and 17% thinking that the first month’s rent did. In light of this, we welcome any move by the government to help improve the transparency of tenant’s fees.”
Will have little impact on the top end of the market
Robin Paterson, Joint Chairman & CEO of United Kingdom Sotheby’s International Realty
“Banning lettings agent fees will have exactly the opposite effect the Chancellor wants. These changes will have little impact on the top end of the market in Prime Central London and a significantly negative impact in the middle and bottom end. Agents in PCL charge smaller fees to tenants in comparison to the lower end. However, with the cost of investing in London property higher than the rest of the country, this will deter investment in the middle and lower markets as these fees will undoubtedly fall to the landlord, creating yet another factor to consider when determining return on investment. This is unfortunately yet another blow to an already fragile market. What the Chancellor should have proposed was more regulation in this part of the industry, rather than simply passing the cost from one party to another.”
This ban on letting agent fees will see rents increase by an extra £255 a year
Paul Smith, CEO of haart
“Today’s news of a ban in letting agent’s upfront fees is yet another unwelcome and haphazard government intervention in the rental market, which will sadly only lead to a backdoor rent rise for tenants. The cost of administration such as references and inventories that tenant fees would have previously covered are now likely to be passed onto the tenant through their rent. We estimate that rents will on average increase by £21.25 per month, which is an extra £255 a year, as a direct result of this change – with tenants in London likely to be much worse off.
“This measure represents yet another government blow for landlords, following the 3% stamp duty surcharge on second homes, the end of mortgage relief and the new rules on lending relative to rental income that have already come from the government in the last year. Landlords are already abandoning more expensive cities such as London because of the costs, even though this is exactly where more rental properties are desperately needed – this announcement is hardly going to persuade them to return.
“The buy-to-let market is suffering, with haart data showing that the number landlords registering to buy has fallen by 25% annually across the UK, and by 60% in London. We’re creating a time bomb for Generation Rent by pushing landlords out of the market, as well as undermining housebuilders’ pipelines by cutting demand. The government should concentrate on getting the market moving again, not penalising landlords, and we cannot wait until the situation on the ground reaches a crisis point.”
A blow for millions of landlords
Tina George, Head of Real Estate at DMH Stallard
“The ban on tenants having to meet the fees of renting property will be a blow for millions of landlords, and whilst more detail is awaited, this is likely to further impact on the profitability of buy to let investments in the future.”
Landlords get hit again
Genevieve Moore, partner at Blick Rothenberg
“Landlords get hit again as the Chancellor announces that they and not tenants will be liable for letting agent fees. In most cases landlords and tenants currently pay these fees, but it is likely that charges for landlords will increase as letting agents maintain their charges. This could trigger increases in rents as landlords recover these costs from tenants – surely not what the Chancellor is trying to do.”
Hitting landlords with extra costs only leads to fewer properties available to rent in the longer term
Nick Davies, Head of Residential Development at Stirling Ackroyd
“The reality of the government’s decision to ban letting fees is that it will only result in landlords passing the bill on to tenants through higher rents. Landlords have already been stung by the stamp duty surcharge and the end of mortgage tax relief, and so it is difficult to see them doing anything other than push the burden back on to Generation Rent. Hitting landlords with extra costs only leads to fewer properties available to rent in the longer term, meaning even greater competition and higher rents. The only solution to the housing shortage is to build more homes and free up public sector land for housebuilding.”
Will go a long way to driving up standards and service in the lettings industry
Kate Eales, National Head of Lettings at Strutt & Parker
“A cap on letting agent fees has been mooted for some time but we are quite surprised by today’s announcement of a full ban on fees to tenants as soon as possible. This will be welcome news to long-term renters and will go a long way to driving up standards and service in the lettings industry by forcing rogue agencies who exploit tenants by charging very high upfront fees out of the marketplace.
“Strutt & Parker is extremely customer focused and we concentrate on offering the best possible experience for our tenants. As an ARLA registered agent the fees we charge our tenants are well-advertised at £185 plus VAT to cover costs incurred setting up a tenancy. These costs have always been well explained to potential tenants from the outset.
“This measure seems to be another attempt to curb the growth of Buy-to-Let investors and will fuel the institutional Build-to-Rent (BTR) sector as private landlords come under more and more pressure. We launched a report last week entitled ‘Housing Futures: Urban Renters’ alongside our partners Stanhope and Network Homes, which concluded that the UK is on the brink of a large-scale commercially developed, owned and operated BTR sector.” N.B. Read all about that rental report on PrimeResi here
A small change and nothing as dramatic as what has come previously
Penny Mosgrove, CEO at Quintessentially Estates
“Mr Hammond’s first Autumn Statement didn’t provide as many shocks to the market as the George Osborne era and while landlords have seemingly been hit again with changes making them liable for letting agents fees, as opposed to the tenants, it is a small change and nothing as dramatic as what has come previously. The ban on tenants footing the bill will be viewed as a ‘niggle’ but unlike the punitive SDLT regime for high-value homes, it is unlikely to stifle the market.
“While the change is seemingly good news for renters, it may result in rent increases as landlords seek to recover their costs from tenants. Until the general housing crisis is fixed, a healthy rental market is imperative in order to help more people own their own homes.”
A brutal blow to landlords that could drive rental markets online
Ed Ghazal, CEO and Co-founder of Propoly
“This year’s statement brings a sigh of relief for generation rent, however Hammond’s actions could deal another brutal blow to landlords. With fears that fees may be driven in the direction of the landlord, their focus will shift to further cost-cutting measures.
“This precipitates the shift away from traditional high street agents and towards an innovative future for the housing sector. With new digital infrastructure funding announced by the Chancellor, this is an opportune moment to drive the rental markets online, putting more power in the hands of end users.
“As landlords face further burdens of epic fees, they will all be racing to the tools that help keep costs down. It will be the low cost solutions that support landlords which can help transform the sector and online platforms can play a critical and inexpensive role in supporting the private rental sector.”
One could almost sense a palpable and collective sigh of relief as the Chancellor stepped back from the despatch box without another crushing blow for the property sector
Naomi Heaton, CEO of London Central Portfolio
“As the property industry braced itself for Philip Hammond’s first (and last!) Autumn Statement, one could almost sense a palpable and collective sigh of relief as the Chancellor stepped back from the despatch box without another crushing blow for the sector.
“In a break from his predecessor’s wont, Chancellor Hammond did not drop any bombshells today. However, the leaked ban on letting agents charging fees to tenants, although surely a populist measure for “Just About Managing” tenants, was also a further attack on beleaguered landlords. Whilst there may be some cases of excessive fees levied, according to the Association of Residential Letting Agents, the average amount currently charged to tenants stands at just £202. Whilst this policy may provide a minor upfront relief to tenants, it is likely that these fees will ultimately have to be recouped elsewhere by agents, passing another cost on to landlords. This seems particularly unfair given that the Government is now laying additional responsibilities on letting agents such as ‘right to rent’ and ‘source of funds’ checks which apply to the tenant. In other words, the Government is making agents take responsibility and liability for tenants and yet not allowing them to charge for this.
“This shift would be particularly unwelcome in light of the reductions in mortgage interest relief coming in next year and the new 3% Additional Rate Stamp Duty which has applied since April. With this succession of hits, it is inevitable that more landlords will act to increase rents to off-set these additional costs in order to manage their balance sheets. Ironically, this will result in further pain for hard-up tenants, already struggling to save their home-buyer deposits – the very people the Chancellor is trying to help. With the chronic under supply of rental accommodation, which is only going to increase with the estimated 1m new households being created during this Government’s tenure, it makes one wonder what the game plan really is by making it increasingly difficult for private landlords.”
What does ‘as soon as possible mean’?
James Bailey, Chief Executive of Henry & James
“Interestingly, at 5am this morning, there were press reports of a ban on letting agents charging fees to tenants. During Hammond’s lunchtime announcement, he confirmed this policy change, explaining that this would be carried out ‘as soon as possible.’ What does this mean? In my view this is a climb down as he has not set a date and is about as open-ended as Brexit. A far cry from how it was being presented by the reporters and in press coverage up until the actual budget speech.
“That said, it does at least give the Chancellor time to consult bodies such as ARLA and RICS. If he intends to implement this measure, a proper period of consultation with industry experts is key to its fair and effective introduction.
“The same question will be raised by many within the industry, ‘where will this lost revenue end up?’, and the same answer will come back, agencies will pass costs onto landlords in the way of fees and landlords will in turn pass these on with higher rents. Ultimately, the tenant suffers yet again.”
- On infrastructure, housebuilding, SDLT and other matters
One major disappointment is that stamp duty reforms were not on the agenda today
Jake Russell, Director at Russell Simpson
“One of the major positives from today’s statement is that the Government continues its commitment to building new homes with £5m Fund, we’ve seen across London through major regeneration schemes such as King’s Cross, South Bank and the impressive Battersea Power Station, just how important new developments can be on both a local and national level. However, one major disappointment is that stamp duty reforms were not on the agenda today. The increases to SDLT have been a huge issue for the property market since coming into force, slowing activity down considerably. This view has only been further reinforced by the announcement since the reforms there has been a £370m shortfall in expected tax returns, not yet close to reaching the £700m that was predicted during the last budget. The London property market played a major role in helping pull the UK out of recession after the 2008 crash, so hopefully the Government will remedy this hindrance and get the market motoring again.”
This is exciting news for the shires
Ian Westerling MD of Humberts
“In terms of funding for new housing the Chancellor was spot on – we need more new homes and fast. Now it’s up to the industry to work together to deliver these homes in key areas and at realistic price points for those looking to get a foot on the ladder. The East/West rail link funding will be welcome news for commuters who regularly travel across the UK from Oxford to Cambridge dubbed the new ‘Silicon Valley’ – with technology at its hub the route, which is expected to take around an hour, will open up the property market in smaller towns and villages to those working in both cities who currently travel in from London. This is exciting news for the shires. A real disappointment was the Government’s inability to address the problems that the increased stamp duty levels are creating for both second homes and at the top end of the market – as an industry we will continue to lobby for change.”
I wanted to see some consideration given to Stamp Duty but I knew in my own head this would not be addressed
James Bailey, Chief Executive of Henry & James
“I wanted to see some consideration given to stamp duty, yet this was not even raised. A major omission in my view. Stamp duty should now be re-considered in spring 2017, when the chancellor delivers his next announcements on Britain’s economy and future finances.
“I wanted to see some consideration given to stamp duty but I knew in my own head this would not be addressed. A major omission in my view. We can but look forward to the last Spring budget in 2017 when we hope this will be reconsidered.
“On a final note I do agree that cities other than London should receive renewed infrastructure and growth but London is still one of the most important capitals in the world and needs to lead by example.”
We are very disappointed that stamp duty reforms made in the last two years were upheld
Thomas van Straubenzee, Managing Director at VanHan
“We are very disappointed that stamp duty reforms made in the last two years were upheld in today’s Autumn Statement. The hikes in last year’s budget have significantly slowed the prime London market. Many people who were previously looking to move – for example, to downsize or upsize or simply for a change of scene – are staying put so as not to incur the increased stamp duty costs, and this only serves to stifle overall market activity. The outcome of June’s referendum added another layer of uncertainty to the London market as would-be buyers worry about sustainability at the top end, and the increased stamp duty is a further deterrent. We believe a cut in stamp duty would have boosted the London property market – and economy.”
The Chancellor has missed a huge opportunity to reverse the mistakes made by his predecessor
Louisa Brodie, Head of Search & Acquisitions at Banda Property
“While £1.4bn of new funding for 40,000 new affordable homes is welcome, the Chancellor is giving with one hand and taking with the other. It makes little sense to leave stamp duty rates disproportionately high which directly impacts the supply of affordable homes, particularly in London. The market is at a standstill and housebuilders are nervous. Fewer schemes are going ahead, which is reducing the number of affordable homes being delivered by the private sector through Section 106 agreements.
“Discouraging the buying and selling of property in London benefits no-one, least of all those in need of affordable homes. The Chancellor has missed a huge opportunity to reverse the mistakes made by his predecessor and oil the engine of the London property market by reforming prohibitive stamp duty charges. The London property market is a powerhouse that generates enormous income for the Treasury, funds affordable housing and creates jobs for thousands of people in associated industries such as estate agency and conveyancing.
“This isn’t about tax breaks for the rich; it’s about enabling the movement of people and labour, unblocking transactions from the top all the way down the chain, and allowing developers to build private and affordable homes.”
I question why the Chancellor is persisting with this blatant incorrect diagnosis of the property market
David Hannah, Principal Consultant at Cornerstone Group
“I see the Chancellor has again succumbed to populist politics and ignored the advice of industry experts by failing to announce the revoking of the 3% surcharge on second homes – a measure that since its introduction in March has seen residential property sales fall, down by almost 80,000 over the same period in 2015.
“First time buyers, who were at the heart of the surcharge rationale, have lost out the most, with properties under two bedrooms rising on average 8.2% since October, double that over the rest of the market. I question why, therefore, the Chancellor is persisting with this blatant incorrect diagnosis of the property market and is not taking a second opinion.
“What we need now is a correct prescription that targets the pressure points and facilitates equal opportunity for first time buyers rather than penalising a significant portion of the market.
“A more sensible approach would be to remove the actual barrier being experienced by first time buyers – namely the monopoly investors have over speed and access to finance at the offer stage allowing them to gazump – by introducing an owner-occupiers offer only market for the first 12 weeks the property is marketed. This would provide first time buyers, or indeed all owner occupier buyers requiring mortgage finance, time to finalise mortgage offers without having to compete with cash-rich investors who are able to tip offers out of the reach of buyers.
“Such a system could be easily administered and regulated by estate agents where the responsibility would ultimately fall, and has already proven its success in places such as the Channel Islands.
“Whilst we all know it is hard to fix a problem by creating a new one, the Chancellor appears to believe this is the best solution for the nation’s property market. I, along with the rest of the property industry, beg to differ.”
The Chancellor has missed a prime opportunity to revive the top end of the market
Rory O’Neill, Head of Residential at Carter Jonas
“In bypassing stamp duty revisions in the Autumn Statement, the Chancellor has missed a prime opportunity to revive the top end of the market, not least because current inactivity can be traced back to the reforms of November 2014. Stamp duty is the only negative stalling the market – even the attractiveness of the pound to dollar based buyers, affordable borrowing and pent up demand cannot overcome the crippling transactional costs of moving house.
“With vendor’s reluctant to adjust the asking price of their property and an emerging reliance on overseas money to inject liquidity into the market, we are continuing to cultivate a potentially toxic landscape for residential property.
“A reduction in stamp duty costs is the final catalyst that the market needs to boost transactions and we will lobby for this in the Spring Statement. Of course, the top end does not operate in isolation and, if left untended, could create a bottle neck at the entry points sought after by first time buyers.”
We’re slightly disappointed the Chancellor hasn’t taken this opportunity to throw smaller, more nimble players any lifelines
Andy Portlock, Chief Executive Officer for Hadley Property Group
“The Government’s pledge to invest in affordable homes is certainly a welcome glimmer of light in a statement shrouded in Brexit Blues. Affordability is at the very crux of the conundrum that is London’s housing sector, so 40,000 new affordable homes is certainly a tentative tip-toe in the right direction.
“While no doubt the industry will welcome the £2.3bn infrastructure fund with open arms, what’s crucial is that developers across the private and public spectrum continue working together to address the wider industry issues such as an ageing workforce, skill shortages, a lack of entry-level training and the speed at which public land is delivered. It is therefore crucial to ensure this timely Government boost becomes more than just a drop in the ocean.
“Smaller, more nimble players like us will continue to play a big part in solving the housing crisis, so we’re slightly disappointed the Chancellor hasn’t taken this opportunity to throw us any lifelines – a review of stamp duty would have injected some much-needed respite. We were hopeful this would be addressed in the vaunted White Paper, however much to the industry’s frustration, we’re again left to wait with bated breath.”
Any grant funding has to work harder to achieve the same outcome that would have been possible in 2010
Anthony Lee, Joint Head of Residential Advisory & Consulting at BNP Paribas Real Estate
“While any additional funding towards affordable housing is welcome, as is more flexibility on how funds can be used, the amount proposed is unlikely to achieve the delivery of 40,000 new rented homes that the government suggests. Before 2010, when grant funding was previously available to fund affordable housing in private-sector led developments it was typically provided at around £30,000 per bed space, or £130,000 for a three-bed unit. However, since that time, house prices in many parts of London have almost doubled, so any grant funding has to work harder to achieve the same outcome that would have been possible in 2010.”
Funding schemes need to be kept relatively simple and quick to navigate in order to unlock resources
Parul Scampion, COO of Fruition Properties
“Any help to housebuilders, particularly small to medium size developers like ourselves is to be encouraged but funding schemes need to be kept relatively simple and quick to navigate in order to unlock said resources, otherwise opportunities could be missed.
“We are disappointed that there has been no relaxation of recent stamp duty changes for second homes as well as at the higher price points above £1m. As a London developer, we believe this affects Londoners more than other parts of the country, with more ordinary homes for hard working families being caught in these higher bands.
“We are seeing significant cost pressures and labour and sub-contractor shortages in the industry, which these additional infrastructure and public sector building commitments will only exacerbate.
“Fundamentally we need to attract and train more people into the industry in order to sustain higher levels of construction. Moreover, the effort to deliver more housing and infrastructure will be further impacted if the available labour pool is reduced by the increase in immigration controls following Brexit.”
We welcome the housing infrastructure fund as it is key that it is easier for developers to build quickly
Mark Harris, Chief Executive of SPF Private Clients
“The Chancellor didn’t make any changes to stamp duty, which is no real surprise but it is still an issue that needs addressing because it is not just about rich people. Punitive stamp duty charges higher up the chain stalls the overall market – and prevents people moving up and down. It is questionable whether higher stamp duty has really worked as the take at the top end has certainly fallen.
“We welcome the housing infrastructure fund as it is key that it is easier for developers to build quickly. They need to get through planning faster and we need more affordable housing on the land around train stations, for example, not a load more million-pound plus flats in Battersea that few can afford.”
The statement didn’t go far enough
Nick Leeming, Chairman at Jackson-Stops & Staff
“Today’s Autumn Statement announcement was good news for the new homes sector, with the Government showing that they are now prioritising housing for those who need it most with huge funding boosts given to support the building of more new homes.
“The statement didn’t go far enough however and it was disappointing that there was no reform to stamp duty, despite industrywide concerns, with our recent research showing a 14% reduction in housing transactions year on year and a £400m shortfall in stamp duty revenue from residential property transactions against predicted revenue this financial year. A cut in current prohibitive stamp duty levels would get the market moving at all levels and give welcome relief to first-time buyers, who are having to grapple with a multitude of costs including saving for a deposit. This reform would have resulted in a chain reaction up the housing ladder, spurring current home owners to take their next step and freeing up housing suitable for first-time buyers and second steppers.”
A let-down for first time buyers and for Londoners
Nick Davies, Head of Residential Development at Stirling Ackroyd
“Sadly the Autumn Statement was a let-down for first time buyers and for Londoners. It seems Starter Homes have been put on the back burner, and the government failed to take decisive action on stamp duty, ducking the opportunity to get the market moving. First time buyers already find it almost impossible to save for their deposit without the help of relatives and this Autumn Statement has done nothing to cut the cost. The top of the market is also flat thanks to the government’s reforms, with landlords also being pushed out of the market by the 3% surcharge.
“The reality of the government’s decision to ban letting fees is that it will only result in landlords passing the bill on to tenants through higher rents. Landlords have already been stung by the stamp duty surcharge and the end of mortgage tax relief, and so it is difficult to see them doing anything other than push the burden back on to Generation Rent. Hitting landlords with extra costs only leads to fewer properties available to rent in the longer term, meaning even greater competition and higher rents. The only solution to the housing shortage is to build more homes and free up public sector land for housebuilding.
“While the Housing Infrastructure Fund should benefit London, there was no news on specific projects for London like Crossrail 2, the Bakerloo line extension, or river crossings in the east of the capital, which would open up new parts of the city for housebuilding and development. At the current rate it will take years for these mega-projects to be delivered – while in the meantime the prospect of homeownership in London will only become even more unachievable for the vast majority.”
This Autumn Statement really gives the impression that it is business as usual; a pleasant surprise
Adrian Anderson, Director of Anderson Harris
“The general consensus, certainly among those working in the higher echelons of the property industry, is that there should have been a reduction in the highest rates of stamp duty but we didn’t really expect that to change.
“This Autumn Statement really gives the impression that it is business as usual. It’s the first one in a long time where there hasn’t been a big change for the property industry, which we welcome. There has been too much upheaval and detrimental changes in recent years so that’s a pleasant surprise.
“One consequence we may see is that rents go up because landlords have less scope for offsetting their rental income against tax. A further attack on buy-to-let could put people off buying who were already wavering while those who are already landlords may well put up rents.”
A very welcome contribution to the affordable market
Eleanor Deeley, Partner, Residential at Cushman & Wakefield
“The government’s new £1.4bn to fund 40,000 new affordable homes (£35,000 per home) is a very welcome contribution to the affordable market. There are many ways in which this could be utilised and whether it is through the direct purchase of land, or whether it is through gap funding across more sites it will certainly go a long way to delivering affordable housing. However what we need now is further detail on how this can be accessed and utilised by developers in order to deliver more housing.
“The introduction of a right to buy for housing association tenants reinforces the government’s policy of supporting home ownership. There is yet to be the detail announced as to whether this would be a ‘buy as you go’ scheme which would allow housing association tenants the right to contribute to the purchase of their home through monthly payments or whether it will be a one off payment.
“The former would be preferable as this will assist those Housing Association Tenants who typically pay 47% of their take home income in rent. What was lacking was any policy to replace those homes which will be sold through this scheme as there is a foreseeable but unintended consequence to this policy that the affordable housing stock could be considerably depleted in the coming years.”
The new £2.3bn Housing Infrastructure Fund is a win-win
Andy Hill, Chief Executive at Hill
“The new £2.3bn Housing Infrastructure Fund, announced in today’s Autumn Statement, is a win-win for the UK economy and housing market. This fund will give housebuilders a helping hand to accelerate the delivery of new homes in high demand localities such as London, Cambridge and Oxford.
“As part of our five year growth strategy, we aim to increase the number of homes we complete annually to 2,500 and with the Government’s help in unlocking land, we look forward to seeing this come to fruition in 2020.
“We won’t know the content of the Housing White Paper until later this year, but it was positive to hear the Chancellor’s renewed commitment to Help to Buy and we hope to see further support down the road. However, it was disappointing that Government didn’t take any steps this afternoon to address the imbalance in stamp duty that is distorting some areas of the market.”
Some positive steps toward addressing the crisis of housing supply
John Tutte, Chief Executive Officer at Redrow
“The announcement of the £2.3bn Housing Infrastructure Fund to overcome local objections and unlock 100,000 new homes in areas of high demand is very welcomed. To be successful, new communities must be supported by improvements to local infrastructure and services and these proposals recognise this.
“The Chancellor’s backing of the UK’s digital economy, and in particular the 5G network, is also welcome news. A recent survey we conducted of our customers revealed that high broadband speeds were the local amenity they ranked as most important to them, even above features like local shops. These policies will not only help UK plc accelerate ahead of global competitors but contribute to creating communities in the UK which people want to be a part of and contribute to.
“The announcement of an Oxford-Cambridge expressway will further unite, and therefore strengthen, these two crucial economic hubs. It is important in the UK that we have strong regions in order to compete on a global scale as a nation and uniting these powerhouses is a positive step toward this.
“Today’s Statement contained positive steps toward addressing the crisis of housing supply in the UK and I am now looking forward to seeing the detailed policies the housing white paper contains to further increase the supply of homes.”
Most of these initiatives will only deliver marginal gains without a fundamental retooling of planning departments within local authorities
Conrad Payne, Partner in National Development at Strutt & Parker
“Whilst it is clear that the Government has good intentions for delivering housing solutions across all tenures, the reality is that most of these initiatives will only deliver marginal gains without a fundamental retooling of planning departments within local authorities.
“There is more than ample capital looking to find a home in the UK housing market, either through direct investment or lending to investors or homeowners, however the reality is that without a significant expansion of human and technological resources within local authority planning departments no amount of carrot or stick will facilitate the levels of delivery that the Government desires.”
Largely disappointing; a subdued Autumn Statement across the board
Paul Cook, Managing Director of Dukelease
“Today’s Autumn Statement is largely disappointing. Obviously, like many of our peers, we would have liked to have seen relaxations to stamp duty. The extreme set of measures set out in previous reforms are no longer relevant to the current market. Since then then we’ve seen Trump elected, the pound drop to thirty-year lows and the UK vote to leave the EU.
“The reforms of 2014 were in response to what we all agree was an overheated market. Today we are facing a very different landscape but the parameters have not adjusted accordingly.
“This afternoon’s announcements are somewhat subdued in contrast to the more radical economic and political changes across the globe. There isn’t anything that is truly going to reignite housing production. Of course, I understand The Chancellor’s concern over house price inflation, but the only way to overcome this is to build more homes. The private sector still remains the primary provider of homes, across all sectors. Yet, the subdued activity in the market – the original goal of the surcharges – sees the rate of building slow in response. It’s effectively putting the brakes on the main source of new homes.
“It’s positive to see transport and infrastructure on the agenda, in particular the investment in the Oxford-Cambridge growth corridor, which will help connect and drive innovation between these two tech hubs. We would however like to see a more significant commitment than 1-2% of GDP.
“A subdued Autumn Statement across the board. Hopefully, as the new government settles in, we will see some braver moves in next year.”
All of the new funding is welcome, but the detail is light
Grainne Gilmore, Head of UK Residential Research at Knight Frank
“All of the new funding announced by Mr Hammond is welcome – especially the additional funds for affordable homes. Affordable homes make up a proportion all new homes built on almost every residential housing scheme across the country. The injection of funding into this part of the market will help the development economics for the whole market, which in turn could further boost supply.
“Detail is light on how the funding will be used and applied, although we expect more to emerge in the Housing White Paper which is due to be released ‘shortly’ – there had been some expectation that it would be published today.
“The Government’s recognition of the importance of the interplay between infrastructure and housing is also very welcome, and mirrors the recent move away from ‘reverse engineering’ housing onto large-scale infrastructure schemes, and instead moving housing to the centre of the planning and preparation of such projects.”
More must be done to unlock land for development, create viable planning structures and encourage housebuilders of all sizes to build more new home
Jennet Siebrits, Head of Residential Research at CBRE
“In today’s Autumn Statement, Chancellor Phillip Hammond once again committed to providing funds geared towards driving housebuilding and increasing new homes supply.
“Mr. Hammond has already pre-announced a £3bn housebuilding fund, aimed at financing loans to stimulate new housing projects, and £2bn to help accelerate construction by bringing forward public sector land. These combined funds will bring forward 200,000 new homes.
“Today the Chancellor pledged to commit £1.4bn towards building 40,000 affordable homes, in line with the Prime Minister’s promise of a ‘housing market that works for everyone’. Whilst all initiatives that address the chronic housing shortage are welcomed, there are currently over 1.2 million people on the waiting list for social housing. More must be done to unlock land for development, create viable planning structures and encourage housebuilders of all sizes to build more new homes.
“The focus on infrastructure is equally promising, with £8bn devoted to housing initiatives and £3bn to transport, which the government promises will help unlock an extra 100,000 new homes in areas of high demand. Housing and infrastructure are intrinsically interlinked and it is critical that if new infrastructure initiatives are going to successfully boost housing supply, the government must focus significant attention on providing better road links for those sites that are currently inaccessible and therefore unfit for development.”
The fact that the Government is supporting affordable housing again must be seen as positive
Justin Gaze, joint head of Residential Development at Knight Frank
“Today’s housing and infrastructure announcements made by the Chancellor show renewed support for the house building sector, legislation which will positively benefit the development of new homes in the long term. Not only will they deliver more much needed affordable housing in its own right, but also act as a stimulant in creating additional private homes on schemes where there is a significant affordable housing element. The fact that the Government is supporting affordable housing again must be seen as positive.
“Yet, the key to safeguarding the successful allocation of the pledged £2.3bn housing infrastructure fund is to ensure it is spent in sustainable locations, where there is a real need for improved connectivity and demand for housing.”
The shame is that the Government did not reduce SDLT
Gary Hersham, Partner & Managing Director at Beauchamp Estates
“Today’s Autumn Statement by Chancellor Philip Hammond was the first chance for government to show its hand: the shame is that the Government did not reduce SDLT on second homes nor was a reduction in SDLT made for primary assets. Had such changes been implemented they would have helped the property market, increasing capital flow, and therefore indirectly increasing Treasury revenue.”