Why the Chancellor doesn't have much room to make buy-to-let concessions.
Jeremy Wood is chief executive of the Dudley Building Society
An Autumn Statement by the Chancellor has, in previous years, been a relatively mild affair until last year when George Osborne shocked the BTL market and second homers with the Stamp Duty surcharge.
With the changes in government since the Brexit vote, there have been suggestions that the new Chancellor might be minded to rescind the surcharge. However, I don’t think he has much room for making that concession, particularly in such a politically charged area.
If he is going to do anything about housing and lending, his focus is likely to be more on FTBs and I would urge for a reduction or elimination of stamp duty in this area. Personally, I would like to see stamp duty abolished altogether on residential property, but again, politically it is highly unlikely to happen.
However, I would hope that Mr Hammond and his Treasury team also look at the other end of the lending spectrum to endorse and build on the work already being done by lenders, such as the Dudley Building Society and others, who are responding to a growing need from older borrowers to make it easier to borrow into retirement.
With the increasing costs of care in old age, the demise of adequate pension provision and increasing costs of living, there is a generation of home owners, who are asset rich but are finding it difficult to gain access to the significant equity built up in their property.
Any government is going to be daunted by the yawning gap opening up between the needs of a generation approaching or in retirement and the resources that government will have to bring to bear on the future needs of this growing sector.
So, with estimates of equity held in property by retired individuals of up to £900bn, it does point to a way in which government could help to incentivise older homeowners to access equity to supplement income and begin to take the pressure off the State for future provision.
Potential avenues a Chancellor could take: -
• Remove stamp duty for borrowers who are looking to downsize to smaller property
• Look to create positive exceptions to regulatory requirements on affordability for older borrowers
• Provide tax breaks for those wishing to downsize and provide money for relatives to purchase a property
• Provide greater access to impartial advice for older and would be borrowers
• Offer VAT breaks/grants on purchase of services to ‘age proof’ existing property to keep more people in their homes longer.
• Remove NI and Employer contributions on salaries to help bring down cost of ‘in home’ nursing/care.
By mobilising and empowering older people, the vast amounts of equity in the UK, could become a huge positive that would help offset some of the pressure growing on the public purse to cater for an ageing population in the future.
Of course, this needs to be part of a more strategic approach to housing generally and I don’t think that government is yet thinking this far ahead, particularly in this Autumn Statement. However, I am hopeful that if we keep knocking on the door, the opportunity to make a real difference at relatively little cost to the Exchequer, will begin to register among politicians of every shade.
