It’s official. Boris is our new PM. And after securing 66% of the vote, it certainly seems that his party is behind him. But what about the property industry?
As ever, the industry was quick to react to the news. Here’s what they’re saying…
Nick Leeming, Chairman of Jackson-Stops, comments: “Today’s announcement from the Conservative Party should inject some stability and confidence back into the property market over the coming months.
Although clarity is urgently needed on Brexit, our new Prime Minister Boris Johnson must also see the property market as one of his top priorities. Prohibitive stamp duty charges have long been a challenge for those on all rungs of the property ladder, and so both buyers and sellers will now be eagerly awaiting confirmation from him and his party on how he decides to address this.
Should Boris decide only to switch stamp duty liabilities from the house buyer to the seller this will do little to improve the overall market. Buyers will look at the combined cost of a property purchase before deciding how much they should bid for it. However for those looking to sell, now represents as good a time as ever to put their home on the market. Stock is still fairly limited, which means there is still strong demand for high-quality homes that are launching to the market at a fair price.”
Melanie Leech, Chief Executive, British Property Federation, had this to say: “We welcome Boris Johnson as the UK’s next Prime Minister – and the property sector stands ready to work with his Government, building on the announcement yesterday of a Built Environment Sector Deal.
We also urge Johnson to bring forward, and get agreement to, proposals for an orderly Brexit. The UK must remain open, with the right conditions for investment and trade, to ensure we remain first choice for global talent as a place to live, study and work.”
Joe Pepper, chief executive officer at tmgroup, said: “There are several major challenges facing the UK housing market. Brexit is the one that gets the most attention, but it is also the one that is furthest from the reaches of the housing industry to influence.
The nation is split in its opinion on the way forward, although there’s a large majority that want the issue dealt with quickly. The challenge is that the easiest answer to that question and the one Boris Johnson has championed, is to leave with no deal on October 31, but it sadly does not necessarily achieve the wished-for outcome.
A no deal Brexit would undoubtedly cause short-term challenges to the economy and it does not deal with the issue that we will then seek to negotiate ‘a deal’ from outside the European Union, and this may prolong the agony for years to come.
Away from Brexit, the new Prime Minister must address the planning laws, which were implemented in the 1980s at a time when we expected the population to reduce rather than grow, if we want to deal with the supply and demand dynamic which has had such a massive impact on affordability.
Looking forward, all that’s certain about delivering on either Brexit or the changes required to the UK housing market is that it will require exceptionally strong personal leadership. Let’s hope Mr Johnson is up to the challenge.
Neil Cobbold, Chief Operating Officer of PayProp, comments: “The buy-to-let market has stalled due to tax changes like the stamp duty surcharge and cuts to mortgage tax relief under Section 24. If Boris Johnson is able to remove all stamp duty and land tax surcharges for buy-to-let landlords, he could reinvigorate the sector – especially in areas with high-value homes where we’re not seeing a lot of movement at the moment.
Although this could help the market, a pledge to cut stamp duty alone won’t be enough to counteract losses from Section 24 and bring the leveraged buyer back into the market. However, the emotional impact of some good news from a new government would have a positive impact on the sector.
By now, the cost of Brexit has been priced into the market. We’ve already gone through enough periods of thinking we were going to leave, so the industry will be indifferent to the October deadline, adopting the attitude that either something will happen or it won’t – it’s out of their control. The only parts of the country that could be affected are London and other immigration hotspots, especially if the government wins its Right to Rent appeal in the High Court.
Boris can be a divisive figure, so I don’t think he will have an overwhelming influence, one way or the other. More important will be any positive changes in the economy, who he appoints as the Secretary of State for Housing, Communities and Local Government, and how actively the person engages with the industry.
Something that would help the industry would be if he overturned Section 24, but it’s doubtful that will happen. As we now have such a large private rented sector, it’s too much money for the Treasury to give up.
If there was one the new Prime Minister could do to change the industry for the better it would be to regulate it properly. The current patchwork of piecemeal legislation burdens professional agents without any real enforcement to deter the small rogue element.
A new government could, in consultation with the industry, replace it with well thought-out rules and regulations together with a central enforcement body. It would at a stroke help improve the consumer’s view of the industry, weed out the few lettings businesses that give the sector a bad reputation, help cut fraud, and bring about a higher level of professionalism. The changes we’d expect to see would be similar to what happened with financial services years ago.
Shaun Church, Director at Private Finance, said: “Brexit will be top of Boris Johnson’s to-do list, but other crucial issues facing the domestic agenda must not be overlooked – one of which is the UK property market. Activity in the housing market is falling* and in desperate need of a stimulus. Rumours of a stamp duty overhaul have been circulating for some time now and we urge Johnson to make these rumours a reality and re-galvanise the property market, which is after all a crucial asset of the UK economy.
For too long stamp duty has stagnated the UK housing market. Last-time buyers in particular remain stuck in homes too large for their needs that are too costly to give up. We’re calling for a last-time buyer exemption to be included as part of Johnson’s stamp duty overhaul, encouraging empty nesters to downsize to homes more suited for their future needs, freeing up crucial housing stock for the wider property ladder.
With stamp duty receipts down 20% annually,** the government is fast becoming a victim of its own policy. Minimising tax liabilities would encourage more people to move, sparking a chain reaction of property transactions which in turn would lead to a surge in receipts for the government. With both the Treasury and UK homeowners likely to benefit from this policy, it could be a quick political win for Johnson.”
Paul Smith, CEO of haart estate agents, comments: “While Boris’ proposals for stamp duty will come as welcome news for many, we could see transactions slow in the aftermath of his victory as buyers halt activity until the policy introduction, so he needs to move quickly. In the long-term, I would expect to see buyer interest increase.
The annual increase in the number of first-time buyers registering to buy reached 21% in the months after the Chancellor cut stamp duty for this part of the market. Should Boris switch SDLT from buyers to sellers, this could provide a further boost to those looking to take their first step on the housing ladder but are currently priced out of the £300,000 threshold.
At the other end of the market, the rumoured policy to half stamp duty for homes worth more than £500,000 would increase fluidity for downsizers and second steppers alike. In this event we’d likely see an uptick in transactions across London and the South East.
The countdown to our Brexit due date is back on and we will see a confidence gradually return to the market. I urge Boris to do all he can to encourage buyers and sellers to the market during this time, and to make sure that the UK can maintain its status as a homeownership democracy.”
Glynis Frew, CEO, Hunters Property plc, says: “With the contest out the way, what is important now is that Mr Johnson is able to clarify all things Brexit and put an end to what has been a turbulent few years for the housing market. It hasn’t been able to receive the political attention it requires against the Brexit backdrop.
His emphasis on home ownership and plans for stamp duty spell good news, although the same cannot be said for the inevitable cabinet reshuffle which is likely to result in a new housing secretary at the cabinet table and possibly a new housing minister. It’s difficult to get to grips with the revolving door approach. Who does it benefit? No strategy to improve our industry and marketplace can ever be properly carried out with all this chopping and changing. Whether it’s chronic undersupply, the affordability crisis or the regulatory environment, it just doesn’t feel like these key issues are being treated seriously enough.
Giving housing its own standalone position at the cabinet table is a sensible way to show they are. The 2018 rebranding of government departments didn’t go far enough. I’d like to see that position with long term backing from the PM and with a brief to carry out a 15-20 year housing strategy, which is based on a proper understanding of the industry resulting in realistic predictions, policies and compromise, not buzz words and hyperbole.”
Marc von Grundherr, Director of Benham and Reeves, commented: “A new prime minister and a clean slate can bring a rejuvenated air of confidence to the UK housing market but while Boris does have a fairly good track record when it comes to housing, he’s probably not the steady hand on the tiller that many would have liked.
He has put his stake in the ground with a number of announcements around the UK housing market but with his plate already rather full, it’s unlikely that any of these will ever come to fruition.
The only reassuring thing is, that despite the absolute spectacle that Brexit has become, the housing market remains resolute and for those with concerns over our new prime minister, you might even go as far to say that it’s Bojo proof.
Mortgage rates will continue to be favorable for those looking to buy, transactions are fairly steady considering, and property values are far from tumbling, so we should see the market strengthen as the year goes on.
Although political uncertainty remains a factor, I don’t think anyone believes we will be leaving in October and whether we do or not, it continues to move further to the back of the minds of UK home sellers and buyers.
Iain McKenzie, CEO, The Guild of Property Professionals, said: “I am in favour of anyone who is going to improve sentiment or confidence in the housing market. Current economic data is strong but the uncertainty of Brexit has caused stagnation in the market. Mr Johnson’s commitment to “deliver Brexit” on 31st October with a new “can do” spirit is therefore very much welcomed.
Going forward with Boris as Prime Minister, I would also welcome any positive move on stamp duty or the additional taxes on landlords.
The Guild has been actively promoting best practice in estate agency for 25 years, including our code of conduct for members and trading standards accredited training scheme. We therefore wholeheartedly support the government’s most recent proposals for strengthening redress and regulating the industry, giving consumers greater confidence that whether buying (re-sale or a new home), selling, letting or renting a property, they are dealing with a professional agent and there is a clear route to redress in the event of a dispute.
However, the one big thing I would like to see happen in the future is the removal of the housing sector from parliamentary control. It should no longer be a political football kicked around by any party to gain political favour. To deliver much needed change in the sector, we need stability and clarity of direction.”