Property and the Budget - RICS Reaction to Chancellor's Changes
Below is reaction from RICS chief executive Louis Armstrong to the implications of the Budget for the property industry.
Residential Property
'European-style' fixed rate mortgages. RICS strongly backs the Government's pledge to look at the scope for introducing European-style long-term, fixed rate mortgages in the UK. RICS has pushed for this in submissions to government. The chief advantages they offer are greater stability in the housing market and the avoidance of sudden shocks when interest rates are pushed up. The current era of low level, stable inflation makes it the right time to be looking at this issue. Possible entry to the Eurozone underlines the need for a more stable market given the loss of sovereignty over monetary policy.
Residential stamp duty. We are disappointed the Chancellor did not take the opportunity to raise the threshold at which stamp duty becomes payable. It has stayed at £60,000 for over 10 years despite the huge rise in house prices. If the threshold had risen in line with house price inflation it would now be at well over £120,000. This makes life even harder for first time buyers.
Commercial Property
RICS is pleased that the Government has for the first time formally recognised the important contribution the commercial property industry makes to the economy, regeneration and society at large:
Decoupling residential and commercial stamp duty - RICS has argued that the Government should recognise that the commercial and residential property markets are very different from each other, and is pleased they will be treated as such in the future.
Stamp duty levels. RICS is pleased the Chancellor has resisted the temptation to raise stamp duty yet again - this recognises that it is important not to further undermine the efficient working of the property industry.
Lease duty reform. The Chancellor is wrong to equate lease duty reform with stamp duty avoidance. Many new business tenants will be adversely affected by 1% lease duty charge on the total net rental value, at a time when the Government is actively wooing the business community.
Commercial leases. The Government has re-iterated its intention to legislate if the commercial property industry does not voluntarily adopt the Code of Practice for Commercial Leases, which aims to bring flexibility to lease terms. RICS believes the code should be given the opportunity to work before regulation is imposed.
For further information please visit www.rics.org.uk