Budget 2016: Changes to the property market in St Albans and across the commuter belt

Copies of the Chancellor of the Exchequer George Osborne's 2016 Budget Statement are seen in Westminster, London (Photo: Stefan Rousseau/PA Wire)

According to an article from City A.M. earlier in the week, the three items on everyone’s property wish list circulate around support for SME developers, funding for brownfield sites, and the ever-debatable stamp duty changes.

“Everyone’s wondering about how these changes will change the wider market,” says Philip Waterfield, director of estate agency Strettons, of the increase to land tax on second homes. “If you fancy a country cottage, it’ll cost you £7,500 extra in stamp duty. It will certainly impact the residential market.”

Mr Waterfield spoke to the Herts Advertiser property section about how the strike of the clock at midnight on March 31 will enforce a new 3 per cent rise on homes over £300k, meaning second home-owners will now be paying taxes of £14k, rather than £5k (on a sliding scale).

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Mr Waterfield – who lives in Harlow, Essex – draws on both his expert and personal experience when it comes to living in commuter belt areas such as St Albans, where an average house price will indeed be in the region of £300k. Those with property worth £100k or less will have dodged this increase, but everyone else won’t have: “Certain people are exempt. So if you own more than 15 properties you’re not included in this, as you are seen to most probably be an investment company. So this involves the individuals, not the corporations, looking at Buy-To-Let investment. Is it, therefore, a level playing field? These changes affect the family and the individual, and the occupier market.”

The chartered surveyor and property auctioneer understands that people will eventually get over the changes that will come into play at the end of this month and will simply “swallow it”.

“There will be a bubble for 3 months and then things will get back on track after the summer break,” he says.

George Osborne (Image: Archant)

Other notable Budget 2016 changes include the scrapping of wear and tear allowance on apartments. “You’re being penalised if you’re a high tax payer,” Mr Waterfield notes.

With regards to the green belt areas, such as St Albans, he predicts that off the back of new announcements the land will be “gobbled up” and that the government will release brownfield and greenfield sites, especially in light of the constant stream of old office blocks in St Albans now being converted to residential property: “There are these buildings from the 60s, now being utilised for Buy To Let investments. People have cash for this. Will home owners buy the flats? One could argue that landlords are doing a social disservice.”

What of the brownfield sites that appear on the Budget-watchers wish list? Development of these areas has been somewhat of a saviour in filling the housing gap. “Since the war, Brownfield sites are convenient for development in urban areas,” explains Mr Waterfield. “There’s a trend in demolishing big houses and building five smaller ones. And the government doesn’t have to encourage that, that’s happening already. So that point on the wish list makes me wonder what more people want!”

Chancellor of the Exchequer George Osborne leaves 11 Downing Street, London, before heading to the House of Commons to deliver his Budget (Photo: Andrew Matthews/PA Wire)

So, why are these changes taking place?

“The government is fearful of 110 per cent mortgages, like we had 10 years ago. They’re scared. They want us to be a nation of homeowners – they like to see that. All these renters can up and leave if they want to, and that’s a worry to the government. The changes are trying to allow the common man to come back into the home owning arena.”

And what of property and Brexit?

“We will be voting, yet there is no idiots guide yet for those wanting to know more about staying within the EU. In terms of the property market, there hasn’t been a migration towards buying in the EU; migration is aimed more towards the UK. So then there’s the Donald Trump approach which suggests we will want to stay British. Unless you were Danish you couldn’t purchase property in Denmark, in order to stop the summer house buyers. Maybe that’s what would occur if we were to come out of EU.”

If Philip Waterfield was Harry Potter, he would wave his wand in order to ease the worry he has for the next generation – a generation that includes his four children. “I would make asset transferring a little easier,” he says with regards to his own Budget 2016 wish list. “If you want to give a house to someone, do it. There’s no such thing as a lifetime home now. Parents still wish they could start their kids off without parting with money.”

Of his own desire to move house, Mr Waterfield’s wife would quite like to hop the boarder between Hertfordshire and Essex – but it would cost them £25k in stamp duty just to make this move. “No one likes to pay tax; and it prevents me moving house. Years ago, people would buy in Nottingham, and rent in St Albans; but it’s the other way around now.”

While City A.M. would like to see the reversal of recent government stamp duty changes, Mr Waterfield argues that they will just find the money elsewhere if they were to backtrack. Some landlords said in surveys they would now quit the sector and warned the tax rises would end up reducing the supply of rental properties, and so drive up rents. Moreover, higher transaction costs on property investment may also deter foreign investment in the UK, weakening Treasury revenues – it has lost over half a billion pounds in revenue during the period as a result of the changes already.

Mr Waterfield predicts that the increase in taxes on landlords will result in the “death of the dinner party landlord – someone who maybe owns one or two Buy To Let properties and likes to discuss them at dinner parties”. The changes boils down to the fact that it may not be financially viable for people to keep their properties.