Chancellor Jeremy Hunt will need to be part-accountant, part-magician on Thursday as he seeks to reduce government borrowing without upsetting fragile economic stability.
He will deliver the autumn budget on 17 November – less than five weeks after being appointed to lead the Treasury.
Following his predecessor Kwasi Kwarteng’s disastrous mini-budget, Hunt has pledged to unveil a plan “to help bring down inflation, help control high energy prices and also get our way back to growing healthily”.
But what would property experts like to see in the budget?
Stamp duty switched to sellers...
In contrast with the beginning of downturns in the early 1990s and late 2000s, there are now more UK homeowners without mortgages than with them, according to professor Yolande Barnes, chair of the Bartlett Real Estate Institute at University College London.
“So Bank of England monetary policy has less effect on demand than ever before,” she points out. “The chancellor has to impose intelligent taxes.
Barnes says it would be “relatively simple” to change the responsibility for paying stamp duty from the buyer to the seller.
“Older, more equity-rich people would be hit rather than younger, more indebted first-time buyers,” she says. “You make money before you pay the tax. Plus in the future you have a supply-side lever in stamp duty holidays.”
... or scrapped altogether
Tom Bill, head of UK residential research at Knight Frank, points to research from the estate agent showing a net positive impact to the economy of almost £1 billion for every 100,000 housing transactions.
“The stamp duty holiday brought in by Rishi Sunak as chancellor during the pandemic saw transaction numbers jump,” Bill says. “There are knock-on benefits for the wider economy when people move house. A recognition of that would be a positive approach to take.”
He calls for economics, rather than politics, to drive a “hands-off approach” to housing policy.
“At a time when the economy is turbulent, you want mobility of labour. It would make sense to remove stamp duty and re-band council tax. That would provide a more even and predictable flow of revenue for the government.”
Capital gains tax and inheritance tax ramped up
Property expert Jonathan Rolande calls for two controversial duties to be ramped up to provide more income to the Exchequer.
“I’d like to see Mr Hunt increase capital gains tax,” says the House Buy Fast founder. Currently levied at 18 per cent or 28 per cent on residential profits, depending on income, Rolande describes it as “a tax on unearned income”.
“Somebody who bought an investment property years ago has seen such massive growth in value, surely they could lose a per cent or two more,” he says.
Rolande also calls for a “grown-up conversation” about inheritance tax, which he says largely relates to homes passed on by the deceased. Currently 40 per cent is paid on the value of inheritance above certain limits and outside specific conditions.
“Pushing this up is one of the few ways to raise revenue without taxing the person who generated the wealth – they don’t need it any more.”
Major investment in greening our homes
Joshua Emden, senior research fellow at the IPPR think tank, calls for a massive investment from Hunt in retrofitting the UK’s housing stock to increase energy efficiency.
“Upgrading homes with insulation and low-carbon heating is the solution at the centre of the Venn diagram of issues facing the chancellor,” he says.
Retrofitting “cold, damp homes” would reduce blackout risk, cut energy bills, tackle inflation and enable the spring redesign of the curtailed Energy Price Guarantee to be more targeted and therefore cheaper, Emden insisted. It would also create jobs and boost net zero ambitions.
“Investing in more substantial grants and loans, a national information campaign and skills and training in local colleges are some of the most sensible measures the government could take in response to our current economic crisis.”
Tax-breaks for energy-efficient builds
Alex Fink, director at net zero developer Etopia, calls for an approach to eco homes that mirrors the incentivisation of early electric vehicles.
He said the huge carbon footprint from how residential properties are run means builders should be motivted to create more energy-efficient homes.
“Incentivise both the developers and residential property buyers to build environmentally friendly homes,” he suggests. “I believe this should be done by bridging the gap in price between installing a gas boiler and installing an air source heat pump with solar panels and a battery.
“You could do this either through incentives to the developer and/or a reduction on tax to the buyer.”
