Andy Burnham ruled out changes to stamp duty on 27 July, a week into the job and days after reports that the government was weighing a single annual property charge to replace stamp duty and council tax. It was just not the case, he said, that plans on that scale were being brought forward.
On 31 July, John Healey confirmed his first Budget for Wednesday 28 October. Reports of a Help to Buy successor have surfaced again in the meantime, an idea already floated and knocked back twice this year, most recently by Rachel Reeves in June.
Zoopla’s index on 30 July put annual price growth at 1.3% against 1.7% a year ago, with sales agreed down 9% in the four weeks to 19 July, and Richard Donnell put the summer slowdown down to higher mortgage rates and political uncertainty. 87 days remain before a Budget whose contents are already moving the market.
Last week some of our clients were not asking which mortgage to choose. They were asking whether to carry on buying at all. These were not people at the start of the process. They had found properties, agreed prices and held mortgage offers. Nothing in their own circumstances had changed. What changed was a newspaper report about a tax reform that, as it turned out, is not happening in October.
I think that is the part governments of every colour have tended to underestimate. The market can absorb policy it understands. It struggles with the months before the policy exists. Buying a home is the largest financial commitment most people make, and it is entirely rational to pause if the tax treatment of that commitment might change before completion.
The market does not wait for legislation. It reacts to expectation, and by the time the denial arrives the decision has already been deferred.
The Help to Buy reporting works the same way. Whether a successor is good policy is a legitimate argument, and one I would happily have, but the immediate effect sits separately from it. A first-time buyer looking at a new build has a reasonable question about whether waiting until the spring leaves them better off, and buyers who would never qualify are asking it too.
On the scheme itself, lenders have largely solved the deposit: 5% is widely available and sometimes less. Where clients stall is the monthly payment, once the borrowing capacity is already there. I think that is the part of the original scheme most often missed. Pairing the 5% deposit with an equity loan that charged no interest for five years left the buyer holding a mortgage several LTV bands below a 95% product.
Lenders tended to price Help to Buy deals a little above the equivalent band, and the payment was still far below what the same borrower would have met on a 95% mortgage. The cost was deferred rather than removed, and the equity loan eventually starts charging interest and has to be repaid. But the mechanism that made it work was the two together, and a successor built around the deposit alone would be copying the half that the market has already sorted out.
None of this stays with the individual buyer. Transactions run in chains. One buyer deciding to wait can cost a seller an onward purchase, leave a mortgage offer to expire, leave a conveyancer carrying a file that pays nothing for another quarter, and leave a broker with months of work and no procuration fee.
Surveyors, removers, agents and housebuilders all sit downstream of a completion. A delay that looks minor from Westminster is a quarter of income somewhere else.
The obvious objection is a fair one. Speculation is not what is slowing this market. Affordability is doing most of that work and mortgage pricing is doing the rest, and the Zoopla numbers would look soft with or without a property tax story.
I would not claim otherwise. What speculation does is add one more reason to wait at a point when confidence is already thin, and it does it to the buyers who had otherwise decided to proceed. That is a smaller effect, and a much more avoidable one.
Nor is the answer for governments to stop reforming property taxation. Plenty of it deserves reform, and no minister can stop a newspaper running a story. The process around it is within their control. Changes of that size should arrive through formal consultation, with implementation dates and transitional arrangements attached, and inaccurate reports corrected in days rather than left to run for weeks. Housing taxation is structural, and it sits badly as a Budget-day surprise.
Between now and 28 October there will be more of this. Some of it will be accurate, most of it will not, and the market will react to all of it. The clients who called us last week were not overreacting. They were doing what anyone does when the rules on the biggest purchase of their life might change and nobody will say so plainly.
My instinct is that the cost of governing this way falls hardest on the people who had already made their decision.
