By The plan announced by the Chancellor sets an ambitious target for 2.5% trend of growth, securing sustainable funding for public services and improving living standards for everyone.
The Chancellor of the Exchequer, Kwasi Kwarteng, said:
“Economic growth isn’t some academic term with no connection to the real world.
It means more jobs, higher pay and more money to fund public services, like schools and the NHS.
This will not happen overnight but the tax cuts and reforms I’ve announced today – the biggest package in generations – send a clear signal that growth is our priority.
Cuts to stamp duty will get the housing market moving and support first-time buyers to put down roots.
New Investment Zones will bring business investment and release land for new homes in communities across the country. And we’re accelerating new road, rail and energy projects by removing restrictions that have slowed down progress for too long.
We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone.”
Setting out the first steps towards growth, Kwasi Kwarteng revealed a package of major cuts to Stamp Duty Land Tax, with the changes expected to increase additional residential investment, boost spending on household goods and support the hundreds of thousands of jobs in the property industry from removals companies to decorators.
The nil rate band will be doubled from £125,000 to £250,000, meaning that 200,000 more people every year will be able to buy a home without paying any Stamp Duty at all.
The standard buyer in England will save £2,500, meaning a typical family moving into a semi-detached property will save £2,500 on stamp duty and £1,150 on energy bills – and if they have a combined income of £50,000 around an additional £560 on tax. This is around £4,200 in total.
And the Government is going even further to support first time buyers, who will now pay no stamp duty up to £425,000, and increasing the value of the property on which first time buyers can claim relief, from £500,000 to £625,000.
This tax cut took effect from midnight today (Friday 23 Sept 2022).
The Chancellor also announced that he will further support homebuyers by increasing the disposal of surplus government land to build new homes, increasing supply.
The Chancellor also set out plans to tackle to the biggest drag on growth – the high cost of energy driven by Vladimir Putin’s invasion of Ukraine, which has driven up inflation.
To tackle this the government’s Energy Price Guarantee will save the typical household £1,000 a year on their energy bill with the Energy Bill Relief Scheme halving the cost of business energy bills, reducing peak inflation by about 5 percentage points.
Also revealed today were major tax reforms to allow businesses to keep more of their own money, encouraging investment, boosting productivity and creating jobs.
New measures include cancelling the planned rise in corporation tax, keeping it the lowest in the G20 at 19%, and reversing the 1.25 percentage point rise in National Insurance contributions, a change which will save 920,000 businesses almost £10,000 on average next year.
The Chancellor also announced more relief for businesses by making the Annual Investment Allowance £1 million permanently, rather than letting it return to £200,000 in March 2023.
This gives 100% tax relief to businesses on their plant and machinery investments up to the higher £1 million limit.
It was also confirmed that the government is in discussion with 38 local and mayoral combined authority areas in England including Tees Valley, South Yorkshire and West of England to set up Investment Zones in specific sites within their area.
Each Investment Zone will offer generous, targeted and time limited tax cuts for businesses and liberalised planning rules to release more land for housing and commercial development.
These will be hubs for growth, encouraging investment in new shopping centres, restaurants, apartments and offices, and creating thriving new communities.
Revealing further tax reforms, Kwasi Kwarteng outlined sector specific support for pubs and hospitality, freezing alcohol duty for another year.
Reforms to modernise alcohol duties will also be taken forward and the government will publish a consultation on these plans.
The new measures backing business come on top of the government’s Energy Bill Relief Scheme for businesses to cap costs per unit, which will protect them from soaring energy costs this winter by providing a discount on wholesale gas and electricity prices.
The Chancellor also reiterated the important principle of people keeping more of what they earn, incentivising work and enterprise.
He announced a 1p cut to the basic rate of income tax one year earlier than planned.
From April 2023, the basic rate of income tax will be cut to 19% and will mean 31 million people will be better off by an average of £170 per year.
Due to the combined impact of the reversal of the HSCL and the reduction of the Income Tax Basic Rate, someone working full time on the current National Living Wage will see a tax cut of over £100.
Alongside cutting the basic rate of income tax, the Chancellor also abolished the additional rate of tax, taking effect from April 2023.
In its place will be a single higher rate of income tax of 40%.
The policy removes the UK’s previous top rate tax, which was higher than countries like Norway, USA and Italy, and is designed to attract the best and the brightest to the UK workforce, helping businesses innovate and grow.
In a further move to grow the economy, the Chancellor announced plans to accelerate new roads, rail and energy infrastructure.
In 2021 it took 65 per cent longer to get consent for major infrastructure projects than in 2012.
New legislation will cut barriers and restrictions, making it quicker to plan and build new roads, speeding up the deployment of energy infrastructure like offshore wind farms and streamlining environmental assessments and regulations.
To further support businesses, the Chancellor announced new measures to unlock private investment.
The Government will change regulations to increase investment by pension funds into UK assets, benefiting savers and boosting economic growth, and incentivising investment into Britain’s science and tech companies.
New measures were also announced to help people on low incomes secure more and better paid work.
Universal Credit Claimants who earn less than the equivalent of 15 hours a week at National Living Wage will be required to meet regularly with their Work Coach and take active steps to increase their earnings or face having their benefits reduced.
This change is expected to bring an additional 120,000 people into the more intensive work search regime.
Jobseekers over the age of 50 will also be given extra time with jobcentre work coaches, to help them return to the jobs market.
Rising economic inactivity in the over 50s is contributing to shortages in the jobs market, driving up inflation and limiting growth.
Returning to pre-pandemic activity rates in the over 50s could boost the level of GDP by 0.5-1 percentage points.
The majority of announcements today are UK-wide, however the Scottish Government is expected to receive more than £600 million extra funding over the 2021 Spending Review period as a result of the changes to income tax and Stamp Duty Land Tax and the Welsh Government will receive around £70 million over the same period as a result of the change to Stamp Duty Land Tax.
The reversal of the Health and Social Care Levy will save 4.3 million people across Scotland, Wales and Northern Ireland more than £230 on average next year.
In the coming weeks, the Government will set out further details of plans to speed up digital infrastructure, reform business regulation, increase housing supply, improve the immigration system, make childcare cheaper, improve farming productivity and back our financial services.
JLL UK Head of Residential and Living Research Nick Whitten comments:
“A number of indicators have been pointing to a cooling UK housing market with transactions down 4.2% against the previous quarter and mortgage lending down 5.7%.
However, just as the Covid stamp duty holiday did, the new reduction in SDLT will boost homebuyer demand and underpin continued house price growth.
Despite the increase in the First Time Buyer stamp duty exemption level, the likely house price growth that it will fuel could ultimately hurt those aspiring purchasers more than it helps them.
And this increased affordability pressure comes at a time when their main support product Help to Buy is coming to an end.
The UK is facing an acute housing shortfall – we build far too few homes to meet demand.
The stamp duty reduction is unlikely to be the policy silver bullet to fix that.
Tax review overdue
Whitten continued, however, reviewing how residential properties are taxed in the UK has been long, long overdue.
Stamp Duty is a hugely inefficient tax which is ultimately a potential hindrance to the future economic prosperity of the UK.
It makes no sense for people to find themselves ‘locked-in’ to their current home because of the tax burden of moving.
People need to be able to migrate towards opportunities as easily as possible in the 4th Industrial Age and as part of the levelling up agenda.
We have an ageing population, but SDLT has been a hugely punitive tax for those looking to descend the housing ladder and right-size in later life.
Without enabling more people to downsize, we have faced many people continuing to live in inappropriate homes for their needs which in turn forces Government to have to increase expenditure on health and social care.”
Tom Bill, head of UK residential research at Knight Frank, comments:
“Just when you think housing demand is cooling, along comes another stamp duty cut.
Together with other measures designed to boost the economy, a cut will intensify and prolong demand in the housing market.
However, what the Chancellor is giving away, the Bank of England will more than take away.
Many buyers will find the impact of rising mortgage rates soon eclipses the benefit of a stamp duty cut, which will keep firm downwards pressure on prices next year.
The cost of a five-year fixed-rate mortgage has almost tripled over the last year and this upwards trajectory will continue.
Almost four million first-time buyer mortgages have been issued since 2009, which is a large group of homeowners who don’t know what it’s like when monthly interest payments rise meaningfully.
The gravitational forces of higher rates will bring house prices back down to earth irrespective of any stamp duty cut.”
Commenting on the Chancellor backing UK business, Andrew Aldridge, Partner at Deepbridge Capital, said:
“The new Chancellor’s overt commitment to the Enterprise Investment Scheme and Seed Enterprise Investment Scheme could well be the single most important decision he takes during his time at 11 Downing Street.
These world-class propositions are fundamental to the creation of the innovative companies of tomorrow.
Particularly within our specialist sectors of disruptive technology and life sciences, EIS and SEIS are key in ensuring the UK is globally recognised as one of the best places to start and scale business.
Being a leading EIS and SEIS fund manager, we are naturally delighted that any shred of doubt has been removed for investors and entrepreneurs.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, comments:
“The horrendous cost of buying a house just got cheaper – at least for now.
The stamp duty cut will ease some of the pressure on buyers right now.
It’s particularly welcome as house prices rocket and interest rates continue to climb. But in the medium-term, it risks making life even harder.
This is the Treasury’s reaction to rising interest rates, which it is worried will squeeze the life out of the housing market.
Higher mortgage rates and higher property prices form a toxic cocktail, that risks killing off demand. For buyers facing forking out thousands of pounds right now, it’s a welcome change.
However, there’s every chance that the change doesn’t drain the toxic cocktail, it just remixes it.
Structural changes in stamp duty aren’t guaranteed to stimulate demand.
When relief was introduced for first time buyers, the government assessed the impact the following year.
It found that most of those who took advantage were going to buy anyway, so it only increased demand by around 1,000 transactions in the first 13 months.
Given the costs involved, that worked out as a cost to the Treasury of around £160,000 per extra transaction.
It was also calculated to have decreased the cost of buying by up to 0,5 percentage points, but increased prices by up to 0.7 percentage points – wiping out any cost saving for buyers.
Even if the change does persuade more people to buy, a shortage of buyers isn’t the biggest problem facing the property market right now, the real brake on the property market is a severe shortage of supply, because the average agent only has 36 properties on the books.
Stimulating demand without addressing this just risks pushing prices higher.
Higher prices coupled with higher mortgage rates are going to push properties further out of reach for millions of people, which could in itself end up scuppering sales.
The property market is a delicate beast, and tinkering with tax incentives always risks producing a result you weren’t fully expecting.”
John Webber, Head of Business Rates at Colliers comments:
“It’s disappointing that while today’s “tax cutting“ Mini Budget addressed issues such as income tax, corporation tax, NI and stamp duty, the “elephant in the room”, business rates was largely ignored (with some minor exceptions concerning the new investment zones), despite the impact that ultra-high rates bills have had on businesses in recent years.
Business rates is one of the highest outgoings for occupiers of property.
The tax raises around £32 billion a year gross (£26 billion net) and with rates rising in line with CPI inflation levels for September, predicted to be around 10%, this could potentially add a further £3 billion to the tax bill if nothing is done.
With just six months to go before the next revaluation, businesses still have no idea what their rateable values will be, what the multiplier will be nor how the government will response to its summer consultation on transitional relief.
With no clarity about how much they will be expected to pay in their rates bills come April, how can businesses be expected to plan sensibly ahead?
In its election manifesto the Conservative government promised it would reduce business rates for those in the beleaguered retail and hospitality sectors.
Now reliefs have come to an end, it will be disastrous if following the 2023 Revaluation the government implements a downwards transition scheme as it did in the last list of 2017, delaying the impact of any rental falls on business rates bills.
Such a scheme would mean any business rate reductions would not be seen immediately but would be spread over the years of the list and will mean many businesses in these sectors will pay too high business rates for too long.
Given current levels of inflation, we calculate that a downwards transition scheme would mean retail businesses, expecting a massive fall in their rates bills in line with rents, will in fact pay £1.65 billion in business rates more than they should do in 2023, and overall, £2.68 billion more than they should do in the three years of the new list.
This could be disastrous for the high street, particularly in the less affluent towns of the country.
Webber continued, “Retailers and other high street operators will be now considering their business plans now for next year and looking closely at their future business rates liabilities.
The Chancellor has said he is simplifying the tax system – in which case he should simplify business rates- one of the most complicated taxes in the UK today.
He can start this by providing reassurance that rates bills next year will immediately reflect the lower rents we are seeing in the market now -providing incentives for businesses to keep or expand space and for property investors to invest in the sector across the UK.
Without this reassurance any “levelling up agenda” will be meaningless. And the high street unlikely to get back on its feet.
In terms of those whose rates bills are likely to go up, such as those businesses in the industrial or distribution sector and some in the offices sector, we also think that given the current pressures from spiralling costs and wage growth, that no business should have to pay more than a 15% rise including inflation.
For smaller and medium sized businesses, these increases should be limited to no more than 5/10% including inflation.
It’s all very well giving reassurance over high energy bills and other taxes, but all this will be meaningless if business rates are allowed to soar.
We are disappointed the Chancellor did not mention this in his Statement today and hope in the next few weeks he will address this issue.”
Ian Paton, partner in building consultancy at Cluttons comments:
“The energy package must be swiftly followed by longer-term fast-paced legislation that will increase the UK’s renewable programme and decrease our reliance on foreign imports which is ultimately the cause of the situation we are in currently.
It’s not good enough to put much needed reforms to electricity, gas and carbon finance into the Levelling Up Bill, which is already incredibly overweight.
Scotland for example is largely self-sufficient and can utilise its renewable energy from vast offshore wind farms.
I would like to see a real focus on grants, subsidies or a fund set up to support businesses to invest in energy infrastructure such as battery storage, solar PV and ground source heat pumps, while some sort of planning fast track for green roofs which maintain heat and increase biodiversity would also be sensible, particularly as perhaps 30% of London viewed from above is rooftop.
In addition, investment in water and plant engineering, EV infrastructure, upgrading affordable housing and making EPCs and building regulations more fit for purpose will also be sensible measures with real long-term rewards.
Removing the ban so quickly on fracking was non-sensical and has increased concerns about the Government’s ability to deal with the energy crisis properly, rather than responding with actions that mean a stay of execution for the administration rather than solid plans such as these suggestions that will genuinely make a difference.”
Darren Zitren, partner at Cluttons’ Manchester and head of network estate management comments:
“We feel very strongly that Levelling Up is dependent on the UK’s connectivity because this fuels economic growth, investment from businesses, talent, jobs, and access to social benefits and healthcare amongst many other things, including access to energy infrastructure which is going to be ever more crucial going forward.
Hence, we hope that the rollout of superfast broadband and 5G infrastructure gets a higher pegging on the list of Levelling Up or ‘trickling down’ priorities than the previous administration’s watering down of targets.
We are mindful that the Government has focussed most attention on energy bills and the cost of living in this emergency business response and mini budget and, whilst this is understandable, the foot cannot be taken off the accelerator of measures that will accelerate growth and support economic recovery to the whole of the UK in the months and years ahead.”
Paula Higgins, Chief Executive of HomeOwners Alliance, a property advice website and campaigning group, comments:
“The Chancellor’s announcement is much needed great news for first time buyers.
The government’s changes to stamp duty mean more people will be able to afford to get on the property ladder.
It’s especially welcome at a time when interest rates are driving up the cost of borrowing. Government has also reaffirmed its commitment to homeownership today.
We agree it is critical: homeownership shouldn’t be for the richest in society, but achievable for everyone. This tax cut is a step in the right direction.
The fact the change is permanent and starts today is particularly welcome as it will avoid the chaos of the previous stamp duty holidays.
It means those who had put their move on hold earlier this week when speculation began can now crack on with their exchange and completion.
The government has taken on board the recommendations of our study earlier this year which found almost a third more first-time buyers are having to pay stamp duty than they were five years ago.
One in four of all first-time buyers now pay stamp duty. We are glad the government has listened and responded with reforms to the way the tax is applied to first time buyers.
We will continue to campaign to scrap stamp duty for those who are buying homes to live in”
Nathan Reilly, Director of Customer Relationships at Twenty7tec says of today’s stamp duty announcement:
“By cutting stamp duty to energise the housing market, the Chancellor is borrowing from the Rishi Sunak playbook.
When we saw this in 2021, we had incredible volumes of new business in the housing sector, and some of the busiest times in living history for mortgage advisers and lenders.
The context is clearly different this time – with a different macroeconomic picture for both interest rates and inflation – but Kwarteng and Truss will be hoping that the house buying market can play a major role in the UK’s near-term economic growth.
The mortgage market is currently increasingly reliant on the remortgage market, and a stamp duty change is likely to rebalance this back towards a purchase-driven market again.”
David Alexander the chief executive officer of DJ Alexander Scotland Ltd, which is the largest lettings and estate agency in Scotland and part of the Lomond Group, comments:
“The reduction in Stamp Duty Land Tax (SDLT) and the increase in the threshold before the tax is paid announced in today’s mini-budget must be replicated in Scotland if there is not be a growing divide between the housing market here and in the rest of the UK.
Scots already face much higher taxation when buying a home and any further reduction in the rates and increase in the threshold in England will only exacerbate what is already an unfair situation.
This move by the Westminster government is clearly aimed at stimulating the housing market and encouraging growth at a time when there are signs of a slowdown.
If the Scottish government cannot match this commitment, and indeed go further, to reduce the disparity between tax levels then I fear that Scots homeowners will be at a greater disadvantage in the future.
I would hope that the forthcoming Scottish budget will match the raised threshold before property tax is levied and decrease the percentage of tax charged to ensure that Scottish and English homebuyers are operating on a level playing field.
If the Scottish government does not replicate these announcements, then I fear that Scotland will be a less attractive place for people to live, to invest, and to grow the economy.”
Jatin Ondhia, CEO, Shojin comments:
“The property market is undoubtedly integral to the UK economy, and its value extends far beyond SDLT tax receipts for the Government, given what it means for developers, investors, agents and service providers.
Once again, as turbulence has struck, the Government has reacted quickly to support the market, just as they did with the Covid-19 stamp duty holiday.
It will be interesting to see what impact this has from an investment perspective.
For instance, we have seen retail investors deterred from buy-to-let purchases due to higher tax bills, but will this SDLT cut offer enough incentive to reverse that trend? I am not sure – the complexity and high cost of traditional property investment continues to alienate many, so we could see more people go down alternate routes, like fractional investing in real estate.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, comments:
“The Chancellor clearly recognises the dangers in terms of reduced revenue from stamp duty, given the recent reduction in housing market activity, and has taken steps to boost the market.
The stamp duty cut, particularly for first-time buyers, should encourage those at the first rung of the housing ladder to take the plunge, which will be good not just for the market but for job and social mobility across the board, as well as the wider economy.
It is good news that it is an immediate and permanent reduction which means that existing transactions shouldn’t be unduly delayed and the benefits can be felt as soon as possible.
We would have liked to have seen extra help not just for first-time buyers but to encourage energy-efficient properties and more investment on cutting energy use.
The ambition to reduce planning red tape and improve delivery is particularly interesting because if there is one thing we need more than anything it is additional affordable housing to sell and to rent.
Nothing is more frustrating than gaining planning permission for suitable schemes and then waiting sometimes more than a year for work to begin as often unnecessary regulation needs dealing with.”
Kamal Pankhania, CEO of leading property developers the Westcombe Group, comments:
“We welcome today’s announcement that the government will cut the rate of stamp duty through increasing thresholds at which people need to pay.
Stamp duty disproportionately affects the average buyer, and this is a welcome step which will help to stimulate the housing sector, making it easier for first-time buyers to get on the housing ladder and, most importantly, encourage the construction of more housing which is so needed across the UK.
The Chancellor has inherited a decades-long challenge and I would urge him to go further with reforms.
For instance, exempting first-time buyers from paying the tax entirely would help support younger people who so often struggle to buy their first home.
Similarly, continuing to raise the threshold at which stamp duty kicks in in line with average house prices increases will help ensure that more people can be exempted from paying the tax altogether.
These are the bold steps needed if we are to rise to this challenge.”
Paresh Raja, CEO, Market Financial Solutions, comments:
“One of Whitehall’s worst kept secrets this week, the confirmation of the stamp duty cut, is nonetheless significant.
Like Johnson and Sunak’s actions during the pandemic, today’s mini budget underlines the new-look Government’s determination to maintain a buoyant property market.
But the true impact of this move remains to be seen.
One common theme of the stamp duty holiday in 2020-21 was that sellers inflated asking prices to account for buyers’ stamp duty savings.
Will we see the same again? It is likely, to an extent at least.
But this time around we have rising interest rates impacting the amount buyers can borrow, so that will also shape the way that house prices move.
I think more action should have been taken to incentivise developers, investors and homeowners to improve properties’ sustainability.
Buyers and renters want greener homes, while the energy price crisis has demonstrated the need to improve how energy efficient buildings are.
So, further financial incentives to encourage owners to lower the carbon footprint of their property would have made perfect sense at this time.
We should expect this to be a recurring theme in the months to come.”
Joshua Raymond, Director at financial brokerage XTB, comments:
“This is an astounding mini-budget.
It’s a huge change of tact from the new Conservative government and sterling buyers are liking it, with the pound lifted from its morning lows with the biggest reactions coming after the cut to stamp duty and income tax announcements.
The pound rose back above $1.12 against the dollar having traded at a low of $1.1147.
The cut to the 45% additional rate of income tax is a huge shock.
It was not expected and will be roundly cheered by higher earners.
The cut to stamp duty is absolutely welcome for new prospective buyers with the relevant thresholds rising, meaning you won’t pay any tax on the first £250,000.
This will help first time buyers.
However, with interest rates rising and expected to hit just below 5% by the start of 2023, much of the cut to stamp duty will be quickly absorbed by higher mortgage costs.
‘Britain is open for business’, the chancellor says?
It certainly feels like Britain is open for business for higher earners, the city and business owners.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, comments:
“This targeted reduction in stamp duty should help those who need it most – first-time buyers who are struggling with deposits as property prices continue to rise in many parts of the country.
Not only that, every homebuyer will benefit from the doubling in the nil-rate band from £125,000 to £250,000, a saving of £2,500.
With mortgage rates continuing to rise, this reduction in stamp duty will be more important than ever.
The fact that it is permanent is also welcome as it won’t lead to spikes in activity as people rush to take advantage.”
Phillip Stevens, director of Richmond estate agency Antony Roberts, comments:
“This stamp duty incentive could be a much-needed boost just as the housing market is starting to slow down and mortgage costs are rising.
We particularly welcome the decision to make it a permanent move.
The temporary nature of the last stamp duty concession, which was tied to completion dates, caused chaos as everybody tried to move in the same week, making it a nightmare for solicitors and removal companies as well.
Making it a permanent adjustment is sensible and far less disruptive, avoiding the delays and bottlenecks we saw last time.”
Giles Coghlan, Chief Market Analyst HYCM, said:
“The mini-budget comes at a time when the government is trying to balance support for consumers and businesses with measures that might trigger further inflation, whilst also trying to reinvigorate a stagflationary economy.
For investors, inflation poses the biggest threat to their portfolios, which the Prime Minister’s new emergency energy bills package should somewhat ease in the short-term.
However, such a large fiscal package could contribute to elevated prices in the medium to long term that could inflict further damage to an economy and currency that are already on their knees.
By cutting VAT, corporation tax and even beer duty, it’s clear that Truss and Kwarteng are committed to encouraging growth and supporting businesses who are struggling to meet the demands of a worsening cost-of-living crisis.
Further tax cuts for consumers, in addition, should provide a welcome boost to their spending power as.
That said, while the effect of these measures is likely to provide a temporary relief for the next few months, investors will be concerned that not enough is being done to power growth and economic resilience for the longer term.”
Tracy Lovejoy, Planning Partner at Irwin Mitchell on the New Investment Zones and Infrastructure Projects Announced Today:
Investment zones
“It is important that the government keeps the right balance between deregulation, which is necessary for growth and the protections contained within the current planning and environmental frame work.
These include how infrastructure systems like highways will cope with the new development and how deregulated development, especially building development, will affect neighbouring properties in terms of noise, overshadowing or privacy.
Local democracy is also a significant consideration as people want to have a say in what is built in their neighbourhoods.
It would be interesting to know how these issues feature in the talks which the government is having with the 40 or so authorities which the Chancellor mentioned.
The factors that make deregulation desirable or necessary need to be considered in conjunction with, and not in isolation of these issues.
It’s also worth emphasising that environmental considerations are no less urgent because of the economic crisis.
Assessment of the environmental impact of these proposals is critical and will be expected to take place as part of the wider impact considerations of any new legislation.”
Infrastructure Projects
“The DCO was introduced as a streamlined process to deal with all necessary consents for major infrastructure and perhaps inevitably can be a significant and lengthy process.
The Chancellor’s announcement sounds like a review of the DCO process to see whether it can be streamlined further or whether an overhaul of the system is necessary.
The backdrop to this review will be the government’s continual assessment, since Brexit, of what EU rules are still necessary in the UK.
It is impossible to tell at this stage what the result of that review will be and how far that process has been undergone from the mini-budget.”
Local Authority Resources
“Finally a number of tax cuts were announced to boost inward investment and to assist ordinary people in meeting the costs of living challenges.
As always, one hopes that the government recognises the importance of proper resourcing of both the local authorities and the Planning Inspectorate, who administers planning appeals as well as development consent order and that the issue of properly resourcing features in the plans which are revealed in the upcoming weeks.”
Kersten Muller, Head of Real Estate and Managing Director at Alvarez & Marsal said:
“It’s unclear whether cutting the Stamp Duty Land Tax will have the desired impact.
Experience from the pandemic Stamp Duty holiday shows that it stoked house price growth and so any savings were wiped out for first time buyers.
The overhaul of the planning laws to encourage infrastructure and housebuilding is encouraging, however previous reforms show that changes to the planning system can lead to a period of paralysis.
Any changes should also take into account environmental commitments.”
Adrian Anderson, Director of property finance specialists, Anderson Harris, comments:
“We have a scenario where the government are trying to turbo charge the economy with huge tax cuts while the Bank of England are trying to put the brakes on with high interest rate rises.
I think many of us will find this scenario very confusing.
Are the measures announced in the mini-budget by the government today sending mixed messages?
Does the left hand know what the right is doing?
The measures announced will help put more money into the economy in the short term.
However, it does not solve the main issue for many of us which is soaring interest rates and a cost of living crisis.
If interest rates continue to rise quickly, many borrowers will have far less disposable income and there will be many who may be unable to pay their mortgages.
The Stamp Duty cut will be welcomed by home buyers as everybody purchasing a new home will benefit.
The announcement is especially good for first time buyers and those living within London and the South East who can claim a discount (relief) on purchases up to £625,000.”
James Hyman, Head of Residential at Cluttons, comments:
“The changes to stamp duty the Chancellor has made today are of course positive for first-time buyers most importantly to counterbalance the increase in interest rates made yesterday.
However, the increase in the stamp duty threshold to £250k will have minimal effect given it is well below the UK’s average house price.
It is disappointing that the chancellor has done nothing to encourage private landlords back to the market.
What would really help the UK’s current housing crisis is a reduction of the 3% levy on second home purchases and reintroduction of tax relief for landlords especially on improvements to their properties.
The main reason why rents have escalated so quickly over the last two years has been lack of supply, which has been driven by so many landlords being forced to exit the market due to the government no longer making it viable to be a private landlord.”
Emma McGlinchey, Head of Real Estate at Aaron & Partners, said:
“The news that stamp duty land tax (SDLT) is cut will no doubt come as a pleasant surprise for homeowners looking to buy property.
Before the fiscal event today, the average homeowner was paying about £5,600 in SDLT.
Now it is estimated that these measures will reduce that SDLT bill to £2,500 and that 200,000 buyers will be taken out of paying SDLT at all each year.
The changes today increase the zero-rate tax slice of a property’s price from £125,000 to £250,000.
First time buyers purchasing a home for £625,000 or less also benefit from a zero-rate slice of SDLT on the first £425,000 of the price of the home with 5% payable on the rest of the price.
These reliefs are up from a qualifying property price of £500,000 with a zero-rate slab of £300,000.
Cuts of this type generally have a complex impact on the property market – not always for the better.
For instance, it could inflate house prices, in turn pricing out first-time buyers.
Whilst the loss of revenue for the Treasury may be neutral if activity increases, such measures do not address the supply side issues.
Also, the opportunity has not been taken to simplify the rules on SDLT.
However, the move by the Chancellor will certainly encourage people to think about moving, boost buyer confidence and hopefully invigorate a market that has showed signs of slowing since the last SDLT holiday ended and recent increases in interest rates.
Certainty has been given to the market as these are permanent cuts.”
Lynda Clark, CEO of First Time Buyer Group, comments:
“It’s about time the Government takes housing as a subject of address. We’re less than a month away from the end of Help to Buy, but we have yet to see an alternative low deposit scheme with the same level of oomph, though shared ownership is an invaluable option for many.
Affordability remains a concern for the next generation of homeowners, with the average house price now above the current Stamp Duty threshold for first time buyers. The Government’s plans to ease this payment is a proven formula which will help to get people moving again, and could save homebuyers thousands during the most devastating cost of living crisis seen in a decade.
Liz Truss is all about trickle down economics, and sure enough if homeownership remains affordable for all, then more first time buyers will inevitably be able to jump onto the bottom rung of the ladder. The Stamp Duty cut could help to bring homeownership back into reach for many, while shared ownership, First Homes Scheme and Deposit Unlock offer additional help.”
Edward Heaton, Founder and Managing Partner of buying agents Heaton and Partners, comments:
Stamp Duty
“I have mixed feelings about the stamp duty cut given our business stands to benefit from these measures which will help fuel demand in an already highly competitive market, especially outside London.
The extensions to the nil rate band will be welcomed by first time buyers and for those acquiring lower value properties especially, but I can’t help feel the result will just be to shore up demand as we head towards a recession.
It may also fuel inflation and it will ultimately make entry to the housing market ever more unaffordable for first time buyers when combined with increasing interest rates.
As someone who can remember when stamp duty was a flat 1% across the board I have never welcomed the steady increase in rates over the last three decades.
The UK has now one of the highest rates of stamp duty for high value property in the world, all of which discourages mobility in the housing market.
The increases announced today are understandably populist and unsurprisingly do nothing to help wealthier buyers.
Sadly the mini budget also did nothing to address the war on second home owners and international buyers with punitive rates imposed on both.
I do not believe this is healthy, especially given many areas rely on tourists to fuel their economy.
I also think in a post-Brexit world the UK should be doing all it can to help make us an attractive destination to foreign money and that should include their ability to buy property without being unduly penalised.
Whilst I believe the recent house price increases outside London are probably sustainable, the stamp duty cuts announced today will definitely increase the chances of creating a bubble which may then burst at some stage.
Proposed planning changes
I hope that government proposals to make changes to the planning system will start unlocking more sites to urgently address the overall lack of housing stock, especially in the south of England. From past experience though such policies often have little or no effect. The devil will be in the detail and I look forward to examining this further.”
Rubens Brotto, Managing Partner at Nest Seekers International, comments:
“Already this week, we have seen the pound to fall further due to the government’s tax cuts and, with the potential public debt hole and the potential dragging into an economic crisis, we expect the sterling to be additionally weakened.
This is not necessarily all negative, instead this creates opportunities for investors and buyers of real estate in the UK.
We have seen a rise of American buyers in London with the strength of the dollar against our currency and international buyers in general flocking back to the UK.
Having the attention of both sets of buyers is a very positive sign for the luxury property market in and around London and today’s announcements will open an opportunity for more international buyers to take advantage of the weak GBP indicating that the UK is the place to invest.
Not just the high-end property market will benefit from these international injection of funds, we expect the mid to lower market to see interest of buy to let investors starting or/and increasing their property portfolios.”
Geeta Nanda, Chief Executive of the Metropolitan Thames Valley housing association and Chair of the G15 group of social landlords, comments:
“Everyone deserves a home and the chance to live well, and this absolutely must be top of the government’s agenda, particularly given the economic strains we are seeing people experiencing thanks to record inflation rates, rising prices and unprecedented energy price hikes.
As Help to Buy ends and the market enters a period of change, the government absolutely must ensure that accessible schemes such as shared ownership receive the investment they so desperately need.
First time buyers need to know what will be on offer from the government and strong signposting that alternatives such as shared ownership are available in the market.
Low deposit options are key to solving our housing crisis, and offer a real solution to first time buyers – particularly those who are stuck in the rental cycle and can only save a small proportion each month.
As we look to the future, we will seek to engage the new PM and her government to work towards finding real solutions to the housing crisis and increasing the supply of affordable homes, whether through additional funding or through unlocking schemes to make the delivery of these homes viable.
If we don’t act on this now, we could risk a lost generation of homeowners right across the UK.
The cost of living crisis is at the forefront of everyone’s minds, and there is a greater need than ever before to ensure that first time buyers in both new homes and existing properties are provided with the support needed to ensure that they can adequately heat their homes without breaking their bank balance.
We hope to see solutions for first time buyers looking to retrofit existing properties across the country to benefit as many young people as possible.
Across all of our new build developments, we are building homes with a minimum ‘B’ EPC rating, helping to improve overall affordability once our shared owners are in their homes and potentially saving hundreds of pounds in energy bills across the year.”
John O’Malley, Managing Director of Pacitti Jones, based in Scotland, says:
“Stamp duty is a poorly thought-out tax, dis-incentivising people to move so any measures to cut it, even in the short term will help encourage people of all ages to move including older people living in bigger properties than they now no longer need.
It also makes it a bit easier for the younger generation to finance a property so should help underpin the volume of property transactions which supports significant jobs throughout the house move experience.
If Scotland was to implement this saving and raise the LBTT threshold from £145,001 to £250,000, it might encourage some of the landlords who’ve left the market, as a result of ill-conceived changes that have been implemented by the Scottish Government, to come back and allow more students to take up or continue their studies.
We know of examples where students now no longer are able to accept a place at university because they can’t find anywhere to rent.
This is a terrible position to put our younger generation in.
The changes to National Insurance contributions should help companies that are struggling and allow more jobs to be retained which can only be positive news for the housing market in Scotland.
The plans announced to boost economic growth will also underpin the local housing markets.
It’s imperative that we in Scotland focus on economic growth to improve the living standards of everyone.”
Santhosh Gowda, Chairman of Strawberry Star, says:
“The stamp duty cut offers a welcome stimulation to the housing industry, particularly in light of Help To Buy coming to an end, that will hopefully underpin economic growth and boost consumer confidence.
It will encourage more people to move, including downsizers, which will free up family homes and allow first time buyers to get on the ladder.
This will be a major fillip to the sector which faces cooling housing prices amid rising inflation and interest rates.
By boosting growth of the residential sector, this will have a knock-on effect on the wider real estate sector and the economy in general.
However, this is not a panacea. It does not change the fact that demand is still outstripping supply and it’s possible that house prices could prove increasingly volatile.
Additionally, it does not address the more fundamental problem at the heart of the market which is the shortage of housing stock.”
Simon Cox, Managing Director of Walter Cooper, comments:
“Today’s statements from the new administration about its ambition to support the economy – particularly the housing market – have been very encouraging.
Cuts to stamp duty will provide a strong incentive for movement throughout the property market.
The details relating to the investment zones have yet to be seen but the designation of regeneration and development areas would lead to new growth and the removal of stamp duty on land purchases in any area will certainly boost the supply of new build properties.
The question will be whether Truss will last long enough to actually make these changes and see them through to fruition, but ultimately, if the government is open for business, then the industry will welcome it with open arms and respond in kind.”
Simon Gerrard, Managing Director of Martyn Gerrard Estate Agents and Abbeytown Ltd, commented:
“What an anti-climax! The new Chancellor spoke about a ‘new approach for a new era’ yet when it comes to ordinary people and, specifically the housing market, he simply hasn’t gone far enough.
It’s all very well cutting Stamp Duty for first-time buyers but for others, the cut doesn’t even address the annual increase to mortgage repayments which follow on from the Bank of England’s recent 0.5% interest rate rise.
Kwasi Kwarteng spoke of upcoming planning reform and the need to get Britain building without offering concrete solutions.
These are the same empty promises made by successive Conservative governments – yielding little to no effect.
The single most pressing issue that housing market faces is a lack of supply.
Put simply, there aren’t enough homes being built due to a planning regime which is simply not fit for purpose.
We urgently need more homes to ease the supply/demand imbalance, yet we are no closer to knowing whether the Government will take serious action.
The proof will be in the pudding.”
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