WITH the Chancellor's Pre-Budget Report coming up on December 9, I thought it might be an opportune moment to look at some of the areas where he could help the property and construction markets - and win his party a few much-needed votes in the next general election.
First of all Mr Darling should look at the residential property sector. This is an area that is currently broken but thousands of jobs in construction, estate agency and financial services depend on it. That’s not to mention all of the retail and services jobs that rely on home sales, from furnishers and house movers and decorators and carpet fitters.
Interestingly, the RICS (Royal Institution of Chartered Surveyors) has been thinking along the same lines and has just published a Pre-Budget submission. With its chartered status, the organisation is bound to act in the public interest, so its advice is genuine and not aimed simply at promoting the profession.
First of all, Stamp Duty. The current ‘holiday period’ for people buying homes between £125,000 and £175,000 is due to end on New Year’s Eve and it obviously should be extended.
Clearly, this is a North/South issue as we have much more lower cost housing in the region. It won’t have much effect in London but there is more concern the further north you go. Longer term, we need reform from the current slab structure of tax to a marginal system.
Then there is energy efficiency – this is really a no-brainer for the Chancellor. If you looked at the vast majority of homes with a thermal imaging camera you’d see that heat loss is huge. Figures I’ve seen suggest a typical house has an annual carbon footprint of seven tonnes, while a new energy-efficient house is just one tonne.
RICS is currently working with the Department of Communities and Local Government on the topic of energy performance and value as it applies to the existing housing stock.
It was recently highlighted as a sector requiring greater emissions reductions in a Committee on Climate Change report.
What is the Government waiting for? Money might be tight but incentives are needed to encourage people, as well as taxation and regulation, to meet the Government’s own targets.
I’m no economist but I suspect that stimulating the market for retrofit energy-saving technology would increase demand for products and services, create jobs and create financial churn. The same could be said if VAT were reduced or removed from construction and improvements – people wouldn’t save that money they would spend it!
Of course, one of the biggest problems facing the housing sector at present is that banks have made it much harder to borrow money. Financial institutions were greedy, they went too far and we needed a period of restraint but now many people who are capable of supporting a mortgage are finding it difficult to get to first base.
The Chancellor must ensure that banks and building societies are not operating overly restrictive lending practices and encourage lenders to offer a full range of mortgage products, especially for shared ownership and shared equity homes.
Kevan Carrick is partner in JK Property Consulting and spokesman for Rics North East