In Focus Consumer Credit


Spring Budget: Why was the property industry ignored?


For property lenders, maybe what was left out of the chancellor’s statement was more interesting than what was included


Paresh Raja Chief executive, Market Financial Solutions paresh@mfsuk.com


In many regards, the 2017 Spring Budget was unremarkable, with few truly significant reforms unveiled across the board. One element of the speech that was surprising, however, was the complete neglect shown towards the UK’s property market.


Two reasons There are two probable reasons for the chancellor’s decision to overlook property in his announcement. Firstly, this was the last ever Spring Budget before the statement moves to the autumn as of the end of this year. As such, the government is likely to be holding back any more notable reforms for its chief fiscal statement later in the year. The second reason is that the Conservative


Party had already outlined its plans for the future of the UK property industry in the Housing White Paper. Released in February, this key strategy


document focused largely on the construction of more affordable homes and implementing greater regulation of the rental industry – Philip Hammond evidently did not wish to indulge these topics any further. Whatever the reasoning, delivering a


Budget with no mention of the property sector remains an odd decision. The UK’s property market is globally-renowned, offering huge appeal to both domestic and international buyers. What is more, real estate is a significant contributor to Britain’s economy and ensuring its long-term growth is, therefore, of the utmost importance. And while there were reforms touted that could have helped galvanise the market and given it real momentum to carry into the imminent Brexit negotiations, the chancellor opted not to make them.


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Gazumping One issue that the government needs to address is the prevalence of gazumping in the property industry, with a substantial number of buyers missing out on properties at the last minute. Our own research, at the start of this year,


revealed that 2.57 million British adults have lost out on a purchase despite having an offer accepted on a property. Not only has this resulted in individuals, families, and investors missing out on their homes


friendly.” However, despite these claims, no formative action was taken. One year on and the government has,


once again, failed to make any progress on tackling the issue of property buyers being gazumped.


While there were reforms touted that could have helped galvanise the market and given it real momentum to carry into the imminent Brexit negotiations, the chancellor opted not to make them


of choice, but it also has resulted in these people losing huge sums of money; data from Which? has shown that property buyers lose on average £2,899 in intermediary fees on a failed purchase – meaning that across the nation the cost of gazumping totals more than £4.4bn. In the 2016 Spring Budget, former


chancellor George Osborne pledged that the government would address the issue of gazumping, stating: “We will publish a call for evidence on how to make the process better value for money and more consumer


www.CCRMagazine.co.uk


Stamp Duty Another of the areas for reform, which was overlooked, was Stamp Duty. Prior to every fiscal statement given by the government in recent years, there have been appeals from all corners of the property market for this tax to be changed. Yet the 2017 Spring Budget did not even mention Stamp Duty, let alone reform it. This is a problem because these excessive


taxes on property purchases can prevent individuals or families from moving to larger homes, in turn meaning there are fewer small houses available for first-time buyers. By cutting Stamp Duty, the government


could have catalysed greater movement at all levels of the market, which, in turn, would have favoured both those trying to get on the property ladder and those trying to expand their property portfolio. The UK boasts a dynamic, globally-


renowned property market offering prime investment opportunities across both residential and commercial properties. Not taking direct action to help the ongoing progression of this sector can only be described as an oversight by the government – and a confusing one at that. As the property industry now awaits the


arrival of the new Autumn Budget later this year, pressure will likely mount on the chancellor to address the issues that he chose to leave untouched on 8 March. CCR


April 2017


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