UK Chancellor Philip Hammond has delivered the Autumn Budget that gave us the first indications of the government response to the biggest downgrade in the UK’s economic outlooks since the financial crisis. The Chancellor has presented some interesting budget guidelines: a conspicuous investment package combined with the promise of planning reform stamp duty cuts for first-time buyers, however, the impression is that we are still lacking the necessary long-term economic plan.
An encouraging news comes from the housing market: Stamp duty will be exempt for first-time real estate buyers up to £ 300,000 of the cost of a £500,000 purchase, with the remaining £200,000 incurring 5%. A 5-years £44bn in overall government support for housing to meet the target of building 300,000 new homes a year until the middle of the next decade. The Chancellor has also given more power to the councils that can charge 100% council tax on empty properties.
He also ensured an extra £15bn and launched a series of manoeuvre including guarantees on housebuilder loans. Nevertheless, his promises to fix the housing market has been rejected by the OBR. The Office for Budget Responsibility announced a reduction in its prediction for residential investment, the amount allocated on building new houses or refurbishing existing ones.
Therefore, it stated house values and housing sales were likely to be lower than it forecasted in Spring Budget and that residential investment growth would encounter difficulties to exceed 2 percent a year during the predicted period and was not expected to exceed pre-financial crisis levels.
According to the OBR, this housing market issue will be one of the main challenges that the government will face in the next future as the housebuilding target is not completely realistic due to a potential economic downturn.
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Alessio Menna & Michele Ammirati
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