Is Jeremy Hunt’s Autumn Statement – Good or Bad News for property sector?
Let’s see has the Chancellor of the Exchequer brought the cavalry racing over the hill to save the stalling housing market? In a word No. No changes to SDLT, so no stimulus here to help the flattening residential market. No revival of Help-to Buy (version two), which would have helped the national homebuilders who are quietly shuttering divisions of their operations due to the downturn.
If you want to read through the full text of the Autumn Statement click on this LINK though I am going to warn you in over 100 pages there is not a lot of great benefit for the property sector in the UK. There are some marginal gains as many of the agencies in the UK have self-employed owners, so they will get a minimal amount of new relief, and also there is further support for business rates.
The Chancellor has played around with the planning application system looking to speed the decision making process with financial inducements, but given that interest rates are so high, the cost of materials and labour is through the roof, I do not see this as a fiscal stimulator.
The rental sector was also untouched apart from the Local Housing Allowance being raised, which will help those in the PRS and LHA, helping some households. Just under £450 million will be allocated to the Local Authority Housing Fund, meaning 2,400 new homes, and consultation on a new Permitted Development Right which allows any house to be split into two flats is to be undertaken.
In fact as I listened to the whole of the Chancellor’s speech live on my mobile as I walked across the fields with my co-director Zara, before she went in search of squirrels, it felt very much that Mr Hunt wanted to look after the interests of some big businesses, and was letting the crumbs fall to those most in need, and I am not being partisan.
The Conservative party have been guardians of the economy for 13-years, and we are being taxed out of existence. We are probably at the start of a global recession sparked by international factors, and despite the Chancellor gaving high rhetoric about lower inflation and lower borrowing likely in 2024, I am not convinced having an eye on the other main economies and their performances. The sad reality is, we sit on a mountain of debt probably fuelled by Covid-19, like other countries, but saying we are a global technology power rings hollow to my ears.
What I do know is that the property market is and will always be a fiscal pulmigator of the economy, and priming the pump helps all. The Chancellors problem is the hawkish Andrew Bailey sitting in Threadneedle street, stroking his chin and wondering what this means for the Bank of England and its own fiscal vision, next month we will find out.
Hunt’s real messaging is, I will give some strategic tax breaks, but instead of safeguarding infrastructure and services, it will benefit big business rather than small people. And with the the OBR saying that although inflation will drop next year, it will remain stubbornly higher than the Chancellor stated in March, the worry is today’s giveaways may result in a further break being put on the economy.
As reported in The Times today, ‘The main factor driving the OBR’s downgrade is likely to be an expectation that the damaging effects of the Bank of England’s interest rate increases will feed through the economy at a faster pace over the coming year … (as) the Bank of England takes a much dimmer view of GDP growth, projecting that it will flatline for the next 12 months and that there is a 50/50 chance of a recession surfacing over that time frame.
When the dust settles over the next 48-hours and the strategic nuances can be pulled out of what the Chancellor delivered, or failed to deliver, the very fact that the property sector was marginalised shows that we are now entering an election phase, where policy gives way to populist rhetoric. They say a week is a long time in politics and it is possibly a year before a General election so a long stretch, with only the tiniest amount of comfort being afforded the housing sector.
The only constant is change in the housing sector
Housing is such a massive issue, so how can you expect someone to make a dent in these matters if they housing minister churns every few months? This is according to Ben Beadle, Chief Executive of the National Residential Landlords Association (NRLA), who was speaking to CEO of The Guild of Property Professionals, Iain McKenzie on the latest episode of The Home Stretch podcast.
In his opening remarks McKenzie asks Beadle when he thinks the housing market will be given the legitimate leadership it deserves from government, rather than simply being used as a pawn to advance a political agenda.
“I don’t think anytime soon,” Beadle responds. “I attended both party conferences and there is no question in my mind that housing is going to be one of the key battle grounds for the election. The Conservatives said very little about housing at their conference, other than planning references. We had a fringe event that Rachel Maclean attended, and it was the only fringe event that was focused on the private rental sector. With Labour there was far more discussion around rented housing, which they see as a vote winner.
‘However, if Labour come to power, Section 21 is likely to be one of the first things they would abolish, whereas the Conservatives acknowledge that there is a balance to be struck with court reform and enhanced possession grounds for landlords before this can happen. There seems to be an interesting power play happening in front of us with who can do the most draconian things.”
Referring back to the Labour conference in Liverpool, Beadle notes that the party have been very clear about what they would do within the first 100 days, such as growing the social housing sector. “They would also want significant more investment in new homes, with a figure of around 1.5 million homes quoted. Of course, this comes with a lead time but in the meantime with the lack of housing supply, Rome is burning. These same challenges await Labour should they come to power, and what isn’t clear is precisely how they would address them. In fact, it is possible that there could be even more challenges ahead if Mr Gove does not deliver on his Renters’ Reform Bill,” says Beadle.
McKenzie responds by saying that there are over 4.5 million renters in the UK, as well as the same number of lettings transactions as there are transactions in the residential sales sector. Given the size of the property sector, the government really needs to start to get this right. The two leading CEOs went on to discuss other aspects impacting the private rental sector and what they would like to see in the Autumn Statement and how these changes could impact the market moving forward.
Commenting on the latest edition of the podcast, McKenzie, said: “With the recent reshuffle and upcoming elections next year there is an enormous amount of change on the horizon for this sector. Ben’s insight into the challenges facing the sector, and on policies that will have an impact on the private rental market in 2024, should be essential listening for property professionals within the lettings segment of the market.”
To hear this conversation in full, visit The Home Stretch podcast.
The Guild of Property Professionals (The Guild) is a network of over 800 of the best independent estate agents from across the UK. The Guild is a sign of professional excellence that agents can use to differentiate themselves from their competitors and assure clients that they will act with knowledge and integrity to achieve results, the three core values of The Guild. To allow agents to perform a superior service, The Guild offers marketing, business and technology services to its members.
Andrew Stanton is the founder and CEO of Proptech-PR, a consultancy for Founders of Proptechs looking to grow and exit, using his influence from decades of industry experience. Separately he is a consultant to some of the biggest names in global real estate, advising on sales and acquisitions, market positioning, and operations. He is also the founder and editor of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.