Richard Sexton, director of e.surv chartered surveyors, commented:
“Raiding banks’ balance sheets smacks of hypocrisy. Lenders are being lambasted for not offering more affordable mortgages to borrowers, yet at the same time are being asked to hand over more money to the Treasury and set aside more in capital buffers. They are conflicting aims. And something has to give. It’s like asking a baker to produce make more cakes and then introducing a flour and egg tax.
More has to be done to help the mortgage and housing market. The government should be doing more be help lenders lend, not increasing balance sheets taxes and fiddling around with small capital expenditure projects. Lending simply has to improve if the economy is to pick itself up off the ground. Net mortgage lending is just £6.1 billion so far this year: hardly the amounts needed to stoke the fire of the economy.
Since the Lehman Brothers’ collapse four years ago, there has been just £38 billion of net lending. In the four years prior to the collapse there was £347 billion. Funding for Lending has helped, but it is counteracted by stringent capital adequacy requirements that leach away funds which could be earmarked for new lending. Banks aren’t yet confident enough to focus on first-time buyer lending. Less than 1 in 10 loans for house purchases this year have gone to borrowers with deposits of less than 15%, compared to 1 in 4 between 2005 and 2007.”
The British Property Federation (BPF) has welcomed the announcement by Chancellor Osborne that from October 2013 all newly built commercial property completed between 1 October 2013 and 30 September 2016 will be free from empty property rates for the first 18 months, up to the state aids limit.
Liz Peace, chief executive of the British Property Federation, said:
“This is a welcome first step towards mitigating the damage being wrought by empty property rates and we commend the Chancellor for taking heed of the powerful body of evidence that we and other industry groups submitted to MPs and to Treasury over the Summer.
The Government is rightly desperate to get Britain building again. Introducing a grace period for empty property rates for new development will remove a millstone from around neck of the property industry, and let it get on with what it does best – investing in our towns and cities, regenerating communities and building the offices, factories and shops in which we work.
However, we urge ministers to look further at how this tax on business failure continues to act as a drag on economic growth.”
CBRE has responded to the measures outlined in the Chancellor's Autumn Statement.
On measure to boost economic growth - "It is to be hoped that the Chancellors optimism for future business investment is reflected in an upturn in commercial and industrial construction work and that policies can be introduced to kickstart construction to assist recovery.”
Dr Neil Blake, Head of UK and EMEA Research, CBRE commented:
“Much of the downgrading of GDP estimates for 2012 and the on-going weakness of UK economic forecasts reflect the parlous state of private sector construction. The problems of private sector house building are well known but commercial and industrial construction has actually been responsible for a far bigger share of the fall in UK GDP since the start of the recession. Almost 50% of the loss in UK economic output since the beginning of 2008 can be attributed to a drop in private construction activity.
It is to be hoped that the Chancellor’s optimism for future business investment is reflected in an upturn in commercial and industrial construction work and that policies can be introduced to kickstart construction to assist recovery. Clearly, anything that simplifies and speeds up the planning process helps, and policies that assist the financing of the sector would be a positive move. If it does not, the construction sector will continue to act as a major drag on the economy for some time.”
On the impact to the retail industry - "It is imperative that the government reconsiders the planned inflation-linked increase in business rates."
Jonathan De Mello, Head of Retail Consultancy, CBRE, commented:
“The government definitely needs to review its earlier decision to postpone business rate re-evaluation to 2017. Given that we have seen a level of retailer administrations and store closures this year - and consequent job losses - unmatched since 2008, this decision is a mistake.
Pre-2008 business rates are not relevant in today’s market where rents have fallen across the UK bar central London and the best major regional shopping centres. The deferral of re-evaluation to 2017 will only serve to perpetuate the inequities that currently exist in the retail sector, and will lead to more administrations and ever-increasing retail vacancy levels in 2013 and beyond.
Given how far rents have dropped in the UK's more challenged high streets business rates in some locations , can be higher than rents. It is absurd that the government makes more money out of a property than the owner of the property themselves.
If the government does not want to consider going back on its earlier decision, one measure that should definitely happen is not increasing business rates in line with inflation until the 2017 re-evaluation. This would not fully stem the rise of administrations we have seen, but would certainly slow it down.”
David Currie, director of Winterhill Largo, asset recovery and insolvency support group, based in Manchester, says:
“We need some stability and it would have been good to have seen the Chancellor bring some hope to the stricken commercial property market. Winterhill Largo are often appointed as Law of Property Act (LPA) official receivers to dispose of distressed properties in cases of insolvency. We are busy at the moment, as sadly more and more businesses find themselves in financial distress that they can find no way out of and the retail sector is being particularly hard hit.
However business premises are increasingly difficult to sell, and in a stagnant market too much cash is tied up in unsold properties instead of being released to be put back into the economy, where it can be lent to businesses and help generate economic recovery.
Next year is likely to be the same or worse. The high costs of holding an empty property, which include empty rates, security and maintenance, all add up to an unattractive prospect for potential purchasers.
If George Osborne in today’s Autumn Statement had introduced measures to kick start some much-needed momentum in the market that would have been most welcome. The government’s Homebuyer scheme has created some improvement on the residential side - proof that government initiatives can have a positive effect.
Meanwhile the retail doldrums seem here to stay without some sort of intervention, and while the banks are not lending, many businesses, as well as individuals, are turning to other forms of lending that is leading them into serious financial trouble.”
Comment on the Autumn Statement today from Camilla Wallace, partner at London law firm Wedlake Bell:
"A further restriction on pension tax relief is likely to have an impact on first time buyers who are already struggling to get on the property ladder because of reduced lending and high property prices. Aspiring second home owners, international investors and property developers have already crowded the market without the arrival of future pensioners driven into buy-to-let investments by unappealing conventional pension arrangements, looking for a safe haven for their "old age" funds."
In response to Autumn Statement, Mark Hayward, President of the National Association of Estate Agents said:
“Today’s Autumn Statement gave little reassurance that the Government has put the problems facing the UK housing market high enough on the political agenda. We had hoped to see an acknowledgement that the Stamp Duty Land Tax system isn’t working in its current format. In reality, the Chancellor’s Statement was a missed opportunity to make this tax fairer for all.
The update on the Scottish Government’s plans to replace Stamp Duty with a more progressive Land and Buildings Transaction Tax (LBTT) announced earlier this week, is of interest. Ensuring the amount of tax paid is more closely related to the value of the property would, in our view, offer a more reasonable alternative.
Since the economic downturn took hold, we have repeatedly highlighted the importance of supporting the first time buyer in particular, to get onto the housing ladder to encourage upward momentum. In order to achieve this and in light of continued bank lending difficulties, we believe similar reform of Stamp Duty in England and Wales is essential.”
The Council of Mortgage Lenders today welcomed the Government's extension of the Support for Mortgage Interest (SMI) scheme.
Commenting on today's Autumn Statement, CML director general Paul Smee said:
"We welcome the extension of the current arrangements for the Support for Mortgage Interest scheme until March 2015. These had been due to expire in January 2013 but today's announcement provides a welcome extension of support for homeowners currently receiving income related benefits, as well as helping lenders to extend forbearance to those waiting to qualify."
National Housing Federation Chief Executive David Orr responds to Chancellor's Autumn Statement.
"The Autumn Statement has left more questions than it has given us answers.
120,000 new homes
"We welcome the Chancellor’s commitment to building 120,000 new homes by using some of the funding set aside for infrastructure.
"On top of September’s stimulus package, this is a step in the right direction to solving our country’s housing crisis. As always, the devil is in the detail and we look forward to learning more about this.
The extra money made available to the Department of Communities and Local Government to buy surplus public sector land is welcome, but it is at a much smaller scale than we expected. It is imperative that the Government moves forward quickly with this and ensures the rapid release of land for new homes.
Welfare
"The decision not to increase housing benefit in the private-rented sector in line with inflation, and to impose new limits on the amount that millions of others will receive in benefits, fails to take account of the overall impact of the major welfare changes already in the pipeline on residents and social landlords.
While the true extent of this impact will not be known for some time, the risk of rising debt and arrears is very real. Not only will this decision hit low-income families hard, it could damage housing associations’ principal income stream, which will undermine their ability to access funding, resulting in fewer homes being built.
Local enterprise partnerships
The proposal to create a single housing pot for local enterprise partnerships raises a number of very important questions: will the money be ring-fenced, and will there be flexibility to move money to areas of greatest need?
We urge government to consider the full implications of this measure. We will shortly produce our own proposals on how this funding should work in order to ensure that we have the right homes, in the right places, for the right prices."
Sue Foxley, head of research at Cluttons, comments on the Autumn Statement:
"It’s good news that there is no change to Stamp Duty or indeed the introduction of the much maligned ‘mansion tax’. However, the lack of political consensus in the coalition Government on this issue creates a question mark over future intentions. The UK benefits tremendously from investment as a result of the transparent and stable tax and regulatory structures. While investors and home buyers may breathe a sigh of relief now, a cloud could hang over the market if there is a possibility it will be revisited in six months’ time. The UK’s standing as an investment destination at a time when London remains one of the few markets perceived to have ‘safe haven’ status must be maintained.
“The £1bn loan and guarantee to extend the Northern Line tube to Battersea power station via Nine Elms will inevitably create new communities and bring more opportunities for investment, while infrastructure projects will support price growth over the longer term.”
Andrea Rozario, Director General of the Equity Release Council, comments on the Autumn Statement made by the Chancellor, George Osborne MP, today:
“We were delighted to see the absence of a mansion tax in today’s statement, given the considerable wealth tied up in people’s property and how it might best be used to support them in later life.
Like the Chancellor, many are facing difficult decisions to balance their books, particularly as they approach and enter retirement. On a personal level, releasing equity from their property can offer a valuable alternative to downsizing in order to fund their lifestyles or meet additional costs such as later life care.
On a larger scale, equity release can also ease a significant problem in society by allowing people to stay self-sufficient into their retirement. Rather than expecting the Government to increase borrowing or taxation to support our aging population, alongside its other pressing economic priorities, equity release can help older generations to continue helping themselves and enjoy the comfortable retirement they aspire to.”
Brian Murphy, head of lending at Mortgage Advice Bureau, comments:
“George Osborne is to be applauded for including affordable housing among the Government’s priorities for spending when resources are so tightly constrained. The pledge to support the construction of 120,000 new homes, bringing the annual total to 230,000, will go a long way to ease the pressure on the nation’s current housing stock.
The Mortgage Advice Bureau’s National Mortgage Index shows that house prices have risen fastest in Greater London, the South West and Yorkshire and the Humber during 2012. So in the interests of those who would otherwise be priced out of the property market, it is encouraging that these regions will gain over 34,000 new homes with affordable rent, with a further 4,200 empty homes being returned to use.”
Commenting on Chancellor George Osborne’s Autumn Statement, Grenville Turner, Chief Executive of Countrywide said:
“It is widely acknowledged that a healthy housing sector is crucial to the UK economy and working with the housing industry needs to be at the forefront of the Government's agenda.
We welcome the Chancellor’s pledge to build more houses which are needed given the predictions that by the end of 2012, there will be 400,000 more households in the UK than there has been housing built. We have been calling for some time now that more houses at the right price are needed in the right places so that people can buy at a price they can afford and in a location they want to live in.
However, the shortage of housing is not the only issue as lack of supply coupled with lending issues is creating a perfect storm. We have been calling for some time now for the Government to set out a clear strategy for housing with the aim being to reduce volatility in the housing market.
“Our YouGov survey in November 2012 showed that nearly half (45%) of 18-24 year olds and 41% of 25-34 year olds cited deposit affordability as a barrier to buying a property at this time. The Government should do more to encourage all lenders, not just state-backed lenders, to set lending targets. This would help buyers with the introduction of higher loan-to-value mortgage products and enable those with sufficient income and a deposit of 10% or even 5% to buy a property.
“We agree with Boris Johnson’s recent comments about cutting Stamp Duty in order to help first-time buyers, and have been urging Government for some time now to scrap Stamp Duty for all properties sub £250,000. This would have a small impact on tax receipts as only 13% of Stamp Duty comes from properties worth less than £250,000* and would be key to increasing activity in the housing market if first-time buyers could get on the property ladder.”
James Poynor, Managing Director of Countrywide Land & New Homes, said:
“We welcome today’s announcement by the Government to invest £10billion in the construction of 120,000 new homes to tackle the serious issues of shortage of supply.
However, the issue of supply should not be viewed in isolation. While building is the cornerstone of the housing market's recovery, land is a developer’s lifeblood. As planning minister Nick Boles was right to highlight we need to free up more land for development. Today’s announcement was a missed opportunity to outline a blue print for making more land available to build much needed housing.
The Government needs to look at these issues both through the eyes of a developer and the home mover. We see first-hand the issues developers face on a daily basis through lack of land, Section 106 planning permission constraints, affordable housing requirements and CIL payments.
Nick Clegg’s proposals to create new incentives to build ‘big and bold’ garden cities are welcome but our experience on large settlements such as Cranbrook in Devon shows that these things can take up to 10 years to pass through planning controls[1] and there’s still a massive question mark over the viability for developers to build on any land that has got permission.
Construction numbers are down despite a raft of Government measures implemented this year including today’s pledge to build more homes. We are hearing of too many cases where sites have full permission but no developer is willing to step forward due to the affordable housing demands and CIL Payments set by the Local Authority.
We call on the Government to re-define what is classifies as ‘affordable housing’ to include shared equity schemes such as FirstBuy which will allow developers to unlock land by replacing the social housing obligations with shared equity products.
Our only chance to move forward is for the Government to look at all the issues concerning mortgage finance, viability and supply, rather than tackling each issue in isolation.”
David Brown, commercial director of LSL property services, comments on the government extending the Support for Mortgage Interest Scheme until March 2015:
“It will be a great relief for thousands of borrowers that the government is extending the Support for Mortgage Interest scheme. A surprisingly strong labour market and record low mortgage rates have kept severe arrears and repossessions cases from rocketing up despite the stuttering economy, but the government scheme has played a crucial role too. With more austerity measures and public sector job losses to come, the scheme will continue to provide much-needed financial life support for borrowers in dire financial straits, and will help prevent mortgage arrears from weighing more heavily on lenders’ balance sheets.”
