As the Budget approaches, industry voices from the worlds of fintech, mortgage broking, and proptech, are united in one plea: the Chancellor must tackle the great barrier to housing market growth punitive tax rates. With transaction levels still languishing well below pre-2008 norms and first-time buyer numbers stubbornly low, the sector is looking to the Chancellor for bold reforms. The question that divides firms is how to pay for it.
Damien Druce, COO at Black & White Bridging, is clear public spending needs to be reined in. “It wouldn’t do her any favours with her own party, but in an ideal world, Ms. Reeves’ Budget would focus on cutting government spending. After all, if the Chancellor got a grip on inflation, the Bank of England would then be in a position to cut the base rate harder and faster, supporting entrepreneurial property investors looking to develop and expand their portfolios. And shrinking the size of the state is not unreasonable: under current government plans, tax revenue is forecast to rise to 37.7% of GDP by 2027–28. At the Budget in October 2024, the OBR forecast the tax burden would climb even higher, peaking at 38.3% in 2027/28! To put this in context, 37.7% of GDP by 2027–28 represents the highest level since current records began in 1948. We are spending too much and as a country, we are not living within our means. Sadly, the chances of this sclerotic government or our chaotic Chancellor getting to grips with bloated public spending seem very slim indeed.”
Rather than focusing on public spending, Richard Sexton, the commercial director of proptech surveyor portal Houzecheck, wants the Chancellor to look at stamp duty: “Rachel Reeves should reduce stamp duty rates for first-time buyers and all residential purchases below £500,000. Lowering a transaction tax like this would decrease upfront costs for buyers and stimulate demand. She could also introduce a temporary stamp duty holiday for properties under £750,000 for the next 12 months. Historically, these boost market activity almost immediately – just look at the impact this had in 2020 when buyers rushed to complete deals before the due date and sellers list more properties. This would also signal a bit of government support for brokers, conveyancers and agents.”
Nick Jones, sales and marketing director at mortgage and protection brokerage Access FS, is looking for more radical reform. “If the Chancellor is looking to be truly ground-breaking, she could ditch stamp duty altogether,” he says. “It’s a regressive tax and hits hard when you are trying to relocate – so it’s a tax on labour mobility, too, holding break growth. Not only does it penalise people who have saved enough to buy a home, or now need to upsize, or to relocate for work – it encourages older homeowners to stay put in larger homes, even if their children have long flown the nest. Let’s not forget that stamp duty hits tenants, too – how else do landlords recoup the money they spend on the surcharge but through higher rents?”
Sexton says he wants the Chancellor to re-examine mortgage interest relief: “If she was feeling really radical, she could also consider subsidising mortgage interest relief for first-time buyers. This sort of direct relief would lower effective borrowing costs and mirror successful schemes elsewhere; as affordability improved, transactions would increase."
But Sexton is interesting in more than the nuts and bolts of owning a home. “As a proptech, Houzecheck would also like to see some focus on AI skills, perhaps via a national AI skills academy with budget allocated for training tech professionals. While we’re one of the largest independently-owned valuation chains in England & Wales, we still need more people with machine learning skills to help speed up delivery of our reports and improve their quality even further. Partnerships with universities and tech innovators would ensure practical modules and graduate placements – and help accelerate AI adoption in the property transactions.”
Mel Spencer, growth director at Target Group is equally concerned about skills. “Rachel Reeves could introduce streamlined global talent visas for AI and fintech specialists, allocate something like 5,000 slots annually for fast-track processing under three weeks. If she was looking to really foster growth, she could subsidise relocation grants for every hire to help families integrate. We could complement this with partnerships with universities for upskilling Brits in data science. These sorts of policies could help plug skill gaps and cement the UK's status as a magnet for world-class innovators.”
Expanding on the fintech theme, Spencer says, Reeves could also “fund regional innovation hubs – co-working spaces equipped for fintech-AI cross-pollination. Grants to support labs, hackathons and JVs between incumbents and start-ups might help. This could also go some way to neutralising London’s AI dominance.”
How is Reeves supposed to pay for all this largesse? Jones is certainly considering how to replace lost revenue – “It’s not as if the UK is running a budget surplus at the moment”, he says. “It doesn’t seem crazy to refresh the valuations used as the basis for our council tax calculations. Council tax was introduced in 1991 and the property valuations used to determine how much each household in England pays have not been updated since then. That means that people whose homes have grown in value faster than average enjoy relatively lower bills; regional disparities in the increases in the value of properties across the North and London are particularly stark. A full revaluation of council tax would not only update an anachronistic system, it might also provide a handy way for the state to rake in some extra revenue with increases in how much tax is charged on each of the new bands, especially at the top end.”
Spencer, too, is focussed on the need to generate more revenue but has a different take on council tax. “Reeves could replace council tax with an annual levy based on a proportion of the value of each home. This would be paid by the owner of the property – not necessarily the person who lives there – and would go to national and local public services. A tax on a percentage of the value of most homes with higher rates on more expensive properties could cover more than the existing council tax take. That might be quite a revolutionary overhaul of the way property is taxed but it would remove a regressive council tax as well as eliminating a disincentive to move in the form of SDLT.”
Are there any bright spots on the horizon? Damien Druce thinks that “the best that can be said of this shambles of a Budget” is that the U-turn on income tax took the heat off landlords. “Not only would this have damaged the appeal of investing in rental property at a time when the country’s rental stock is shrinking despite growing demand, but it would force landlords to raise rents. Ultimately, that would mean tenants would be picking up the tab.”
“Landlords are already leaving the sector in droves. Our own data recently revealed that 93,000 buy-to-let landlords will have left the rental market by the end of this year. But the private rental sector is vital to the country’s housing landscape, driving development and redevelopment of property across the country. Targeting this sector will only cause more landlords to sell up, more people to struggle finding affordable rental accommodation, and more ageing properties to sit uninhabited and in desperate need of investment and redevelopment.”
It's not, perhaps, a ringing endorsement of the Chancellor’s plans.
