The Royal Institute of Chartered Surveyors has reacted to the Chancellors plans for housing as announced in the Budget.

On the issue of the delivery of 200,000 new homes on public sector land, RICS said: “The Government has committed to achieving the delivery of 200,000 new homes on surplus public sector land by 2016, and the Budget announces that the Government has firmly identified sites on central government surplus land with potential for 70,000 new homes.

RICS believes the commitment to making public sector land available for housebuilding is necessary, but will only solve part of the land supply issues if we are to achieve the Government’s housebuilding targets.

Identifying sites for 70,000 new homes is a drop in the ocean when two million additional homes need to be built by 2016.

Encouraging the re-use of existing buildings and allowing well managed development on Greenfield sites must also be encouraged if housing targets are to be met. ”

VAT Reductions on Refurbishment and Renovation of Properties
“In the 2007 Pre-Budget Report, the Government announced a reduction in VAT on the costs associated with refurbishment or renovation of properties that have been empty for more than two years.

In further support of its housing objectives, the Government will now explore the case for additional targeted and cost-effective VAT measures for the refurbishment or renovation of other dwellings that are of too poor quality to rent or sell.

RICS mentioned that it is essential that VAT is lowered from 17.5% to 5% on the renovation and repair of buildings as soon as possible.

The current rate of VAT acts as serious block to the reuse of empty property and makes it overly expensive to improve outdated facilities such as bathrooms and kitchens.

RICS has been calling for this change for several years as an effective tool to boost the number of properties being brought back into use.”

Stamp Duty Relief on Shared Equity Schemes
“RICS welcomes the changes to the shared ownership schemes that were announced in today’s Budget.

Reducing the proportion of a property that is liable for Stamp Duty to generally 20% is a sensible policy change which will lessen on the tax burden on the financially stretched households, at whom the shared ownership scheme is aimed.

Furthermore, the announcement that people will be able attain shared equity products of up to 50% of a home’s value should ensure that shared equity products are open to an even wider array of lower income households.

However, the scale of shared equity operation will be too low to satisfy the demand from households who find traditional methods of purchasing to be prohibitively expensive.

Eventually, these programs must be expanded to accommodate a larger demand, but this can only take place when the supply of new homes has increased to match the demand from new households. ”

Excluding Low Value Transactions from Stamp Duty Admin
“The Budget includes sensible measures to reduce the administrative cost of stamp duty to those who do not need to pay it.

Residential and commercial transaction under £40,000 will no longer have to submit the relevant SDLT form.

For transactions above 40,000 where no SDLT is due, the person undertaking the action rather than the agent or solicitor will now be able to sign the form.”

RICS welcomes this common sense reform to the administration of Stamp Duty.
“The SDLT form is designed to capture avoidance of stamp duty so it was wrong that those not paying any duty were paying others to deal with the form.

This will simplify property transactions for lower income homebuyers and small business.”

Long Term Fixed Rate Mortgages
“In his speech Darling announced his intention to improve the attractions of fixed rate mortgages but RICS maintains this does not mean that these mortgages will necessarily be suitable for all.

Many borrowers will continue to have a preference for interest rates that more closely reflect underlying economic conditions.

RICS also believes there is a strong case for greater transparency on mortgage arrangement fees which have risen sharply in recent years.

Not only do they mask the relative attractions of individual mortgage products but with regular refinancings, these mortgage fees are proving increasingly burdensome for homeowners.

On the plan to set up a Working Group to look into establishing a Gold Standard for mortgages to help strengthen financial innovation, RICS believes that there will be need to show what this will add to the existing system of ratings of mortgage products.

While agencies are under something of a cloud at the present time, it is far from clear that another body effectively charged with the same responsibilities will fare any better.

Moreover at the present time it is price volatility rather than actual credit risk that is scaring the natural buyers of these mortgage instruments. “