An alternative spring budget

Gareth Davies by Gareth Davies | 08 Mar 2024

Gareth davies managing director grosvenor surrey

Gareth Davies, Managing Director at Davies Property Partners

This year’s Spring Budget didn’t really help the UK’s property market. An opportunity wasted? Gareth Davies, Managing Director at Davies Property Partners, thinks so. Here he provides three things that he feels should have featured in the Chancellor’s announcement.

As is always the case days after the Chancellor’s Budget, there’s never a shortage of people – journalists, businesses and the general public – commenting on what’s been announced, and what it means for them.

So, rather than fall into the camp, I’m going to take this opportunity to comment on what wasn’t said. Or, more to the point, comment on what I think should have been announced from the perspective of the property sector.

Here are my top three alternative Budget items, which, had the Chancellor announced them, could have helped the property market and, more importantly, the homeowners that form it.

1. Council tax reform

The current council tax structure needs to be torn up and rewritten. After all, it’s based on the value of what properties would have sold for on the open market on the 1 April 1991 – even if it’s been recently built! Not only is this approach over three decades old, but the property market has evolved so much since then. Take Cobham, for instance. Given the high values that homeowners in the area are now fortunate enough to attract, most properties fall within the top two bands – G and H. This also means that those who live in a £1m - £2m house could be paying the same as someone living in a £6m house. At the very least, more bands should be introduced so that property owners are paying tax at fairer ratios. In doing this, maybe the government could afford to address my next point.

2. Abolish Stamp Duty Tax

Stamp Duty is a tax on tax, as it’s paid from taxed income, which feels harsh from the outset. So, let’s say you’re buying your next home in Elmbridge for £1,500,000, which, these days, isn’t uncommon. The Stamp Duty liability on that property would be £91,250, which means you would need to have earned around £200,000 just to pay the tax bill. If the Chancellor were to abolish this double tax, then it would remove some of the barriers to moving. After all, where is the incentive to downsize – which, it’s important to remember, would free up family homes – if they’re going to get clobbered with a hefty bill? Without Stamp Duty, there would be much more movement across the property market.

3. Change planning policy

As it stands, the government is failing to meet housing targets such as higher housing density and more affordable housing. Yet the machinery and processes that underpin major planning decisions are the very thing that is slowing it down. It’s not uncommon for developers to be made to wait for between 18 months and two years to get a decision – a process that will incur a huge cost (money and time) even if the decision doesn’t go in their favour. There is huge demand for more housing in and around Elmbridge, and yet the planning system currently restricts properties from being built. Maybe it’s time to take this decision making away from the local committees and fund councils to employ professional planners, who could expedite the process and go some way to grease the wheels and ensure that supply more effectively meets demand.

We were hoping that the Chancellor was going to tackle the UK’s property sector and better meet the needs of homeowners head on. Instead, it’s largely been ignored. Maybe these three points could give the Chancellor some food for thought.

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