Chancellors of the Exchequer like to spring a Budget surprise when they can. Usually the final flourish in the speech to the House, it’s become known as the ‘rabbit out of the hat’ by the media.
Chancellor Philip Hammond
You could compare it to the ‘one last thing’ moment famously used by Apple founder, Steve Jobs, before he unveiled the company’s latest and greatest invention, but it’s rare for politics to be able to match that particular razzmatazz!
In a spectacularly dull Budget this week, Chancellor Philip Hammond, hoped to capture the magic of that moment by producing a well-concealed rabbit; namely the effective scrapping of Stamp Duty for first-time home buyers.
We welcome this move. Anything which helps young people to get onto the first rung of the property ladder is good for them and for wider society in general.
There were almost immediately raised concerns that this would only serve to benefit home sellers, because they would increase prices by the value of the Stamp Duty. We tend to think that’s a very negative way to look at this move.
Home buyers will still look at the overall value of the property – what it’s really worth – and the market will still determine how high that price can go. There may be something in the theory, perhaps, but we don’t think it’s a given.
What should happen is that first-time buyers who are currently close to having enough saved for their deposit, but still had some way to go before they had the funds to cover Stamp Duty, will now be able to move. That could advance their position by many months, or even years.
The same benefit will hopefully roll down the chain, with buyers no longer having to find a few thousand extra pounds before they can start their move into the market.
A Budget for building
This situation has to be looked at also in the light of moves on the planning system which are aimed at getting the more affordable end of the market moving with new homes being built. Steps to ensure empty homes are made available to let or buy and for new ones to be created on land that is waiting to be used will hopefully balance any prices rises against the available supply of properties.
As with any action, there will be a reaction and maybe some unintended consequences, but we should see this in the light of attempts to improve the situation and hope it works for those it is aimed at.
In better news, there were no raids on pensions (there had been some pre-Budget concerns of impacts on higher rate pension savers) and little change in the tax status of investments such as ISAs.
That said, a regular assessment of your financial products, insurances and pensions is extremely wise, so whether you’re a first-time buyer ready to make that first property purchase, or someone with an existing mortgage, insurances and pensions which could do with reassessing, we’re here to have a chat and to help keep you on track.
Unlike the Chancellor with his rabbit, we prefer our clients to avoid surprises when it comes to their investments!