Budget 2009: The property industry responds to the budget

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Keshav Thukaram, managing director of smartlandlord.co.uk, said: 'The Chancellor’s extension of the stamp duty holiday might encourage a few more first time buyers back into the market, but could result in gridlock when it returns next year. False starts won’t help anyone and the market needs real reform to get it back on its feet. With such a high government deficit, abolition of the tax is unrealistic, but it should be incumbent on the seller to pay – not the buyer. That way all first time buyers will be exempt and the tax will fall most heavily on the elderly with more housing wealth.

'Measures to keep people in their homes need to be extended to the private rented sector, where landlords are at risk of defaulting if tenants can not pay their rent due to redundancy or any unexpected loss of income. Realistically, the social sector in the UK is ill equipped to pick up the slack as the level of home ownership falls, and the money pledged to the social sector today is a drop in the ocean. More support needs to be granted to the private rented sector, which plays a vital role in the UK housing market.'

Lee Watts, Managing Director of Kinleigh Folkard & Hayward, comments on the 2009 Budget statement: “We welcome the extended holiday that the Government has chosen to grant on the payment of stamp duty on properties purchased for £175,000 or less, but in reality, it’s more of a long weekend.

“Stamp duty is an obstacle for many buyers, particularly struggling first timers who find getting a foot on the property ladder in London more difficult than most. However, it is important to remember that, even in a struggling economy, there are very few properties available within London under the £175,000 threshold, so first time buyers in the capital won’t really benefit. Less than 5% of the properties that we are currently selling would benefit from the stamp duty break that is being offered.

“The Chancellor could have chosen to rework the levels of Stamp Duty entirely, but in the absence of cuts across the board, this extended holiday will offer some relief to the market.”

Budget comment on housing issues from Peter Dines specialist housing partner at Gerald Eve: 'Home building is in crisis with household formation soaring. This stimulus will have a direct impact in the creating of new homes onto the market and it will increase confidence in the house building sector. The current national house building target is 240,000 homes a year by 2016. The number built in 2007-08 was 204,230. However, that figure is falling drastically, with developers unable to proceed with projects because of lack of demand from buyers. Maintaining home building skills and capacity needs to be supported to loose these would have a greater long term impact on the economy. Support now, reduces the negative impact on the economy and sets the foundations for swift recovery when the economy turns.'

Alan Downey, KPMG’s Head of Public Sector business, said: “The Budget may be luring the public sector into a false sense of optimism and complacency.

“The Chancellor has not taken any major steps towards making the big savings he eventually will have to make in two or three years when the recession ends. The public sector might be relatively safe at the moment because everyone knows that the Government is committed to a Keynesian policy of fiscal stimulus which means using public money to help ease the real economy out of the current downturn.

“But there is no such thing as a free lunch, eventually the government will need to pay the bill, either by raising taxes or by cutting spending.

“When that happens, the consequences for the public sector could be dramatic. Senior officials are beginning to wake up to the reality of the situation, but they may still be underestimating the scale of the problem.

GVA GRIMLEY SUPPORTS PROPOSED GOVERNMENT PROPERTY ASSET SALES

In the 2009 budget the Chancellor announced that 'The Government has set itself a central goal of realising up to £16bn of property and other asset sales in the three years starting from 2011-12, with proceeds raised being used for new capital investment.'

Stuart Morley, Head of Research at GVA Grimley, said: ‘This initiative, although optimistic, may create opportunities for developers and investors who are able to pick up often well located buildings at a significant discount. This will be particularly true where there is an alternative use value which provides for further upside. Purchases made in the 3 years starting from 2011/12 could be well timed should occupier confidence return to the West End in particular.

‘However, the timing of the initiative as a revenue generation exercise for the government is questionable against a backdrop of declining asset values and lack of liquidity in the market.’

Research conducted by GVA Grimley suggests that the Central government freehold estate is worth approximately £1.5bn when valued assuming vacant possession prior to disposal, reflecting around 10% of the total target asset sales. The real figure is likely to be much lower than that however, as realistic opportunities to dispose of the buildings identified may be limited. Should the central London investment and development market return to the level of the long term average however, then those properties which are eligible for disposal will realise approximately 25% higher values.

Stuart Morley continues: 'Given central London's historic high rents and associated capital values, it may be sensible to assume that the majority of the revenue to be realised from property will come from that market. Combine this with the likelihood of further relocations out of London to the regions, then it would seem plausible that the associated aims of raising revenue and addressing the relocation agenda could be achieved.’