The big news in today's Budget was the abolition of stamp duty for most first-time buyers.
From today if you buy your first home you'll pay nothing to the government on the first £300,000 (unless it costs more than £500,000 and you need to be super-rich before you're in that territory).
This cut could save you up to £5000. This gives you extra spending power if you're vying with an investor to buy a home. On that basis we might see more people buy a home. However, with around 60,000 investor purchases in the last quarter, and 96,000 first-time buyer purchases, you're more likely to be competing with one of your peers. The money that is no longer going on stamp duty may well simply push up the price for the house you want to buy.
The Treasury reckons the the policy will cost £560m for the first full year. Already the Office for Budget Responsibility has warned that it will push up prices and that 3500 more people will be able to buy a home because of this change. Even if we assume that's per year, this is an incredibly expensive way to increase home ownership rates - which is presumably still the government's ultimate aim.
Of course, the real winners are people who already have property to sell and can collect a higher price. But the rise of renting means that fewer people are in this position, so the electoral rewards of a move like this are diminishing. It will soon become clear how ineffectual and wasteful this policy is, so the government needs something else to offer renters.
That brings us on to longer tenancies. Sajid Javid, the Communities Secretary, suggested last month that the Budget would contain details of how they plan to incentivise these, but Philip Hammond only announced a consultation on overcoming barriers to longer tenancies - i.e. kicking the can a little further down the road.
The government clearly hasn't made up its mind about what to do, so there remains work for us to do - you can write to your MP here.
There were several other policies on the rental market and wider housing world:
- The government is offering a £2m prize to someone who can figure out how to link rental payments with credit scores, ostensibly to make it easier to get a mortgage, but potentially helping with tenancy applications and accessing other types of credit.
- A review of rent-a-room relief to see how it could encourage longer tenancies (probably not a lot because most renters will be lodgers, with licences rather than tenancy agreements).
- £20m to help people at risk of homelessness to access and sustain private tenancies - this could pay the deposit for 20,000 households.
- Allowing councils to levy a 100% council tax premium on empty homes to encourage them back into use (a drop in the ocean for many absentee owners)
- £125m to help 140,000 housing benefit and universal credit claimants in expensive areas to pay their rent. While it is worth £280 per household, this is sadly not the unfreezing of Local Housing Allowance that Shelter has been leading a campaign on.
- There is also £15.3bn of extra investment over 5 years to support housebuilding, alongside a range of planning measures, albeit none that appear likely to significantly increase levels of affordable homes in the short term.
This time last year the Chancellor announced the ban on letting fees. For an event that has been described in recent days as The Housing Budget, we were expecting announcements of similar mould-breaking panache. Sadly, it's been a bit of a damp squib.