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The Treasury has confirmed that the newly appointed Chancellor George Osborne will present his emergency Budget on Tuesday 22 June, less than six weeks away after the new government has taken power.
Although a number of the government’s flagship tax policies were revealed in the Coalition Agreement there are many difficult choices that have yet to be made, for example whether or not VAT will rise. Entrepreneurs will also be eagerly awaiting details of the proposed increases in capital gains tax and the proposed reliefs.
Home information packs are one of the first casualties of the new coalition government and on the whole this decision has been welcomed as good news for the housing market. After all, sellers see them as an annoyance, buyers don’t ask to see them and solicitors often refuse to rely on the information they contain.
Very few people can say that the introduction of HIPs was not full of good intentions – they were designed to speed up the home-buying process and prevent people from pulling out of purchases further down the line. But the packs were ultimately diluted to the point where buyers and mortgage lenders did not have the information they needed – such as a structural survey – and they’ve been on borrowed time ever since.
In a note out about the decision to scrap HIPs, Nicholas Leeming, commercial director of Zoopla.co.uk, is calling for the government to act quickly to scrap these plans as a delay may cause homeowners considering selling to wait before putting their homes on the market. He says:
A reduction in the supply of homes for sale at this crucial stage in the housing market recovery would harm the revival.
He also says that the retention of Energy Performance Certificates is an environmentally positive move it is more about “complying with EU directives on reducing carbon emissions than helping home buyers and sellers” and that “the new government should now consider replacing HIPs with a simple pre-sales pack to include local searches and a draft contract for sale only.”
Liam Bailey at Knight Frank also believes the HIP decision could go further. He says:
The need to provide an EPC will remain and is still a hurdle to get properties to market. The objective must be to follow the French and Portuguese and require an EPC only when terms have been agreed on a sales – not prior to marketing.
Whatever happens to HIPs it is clear that all eyes are on the UK property market and how the new government’s policies will affect house prices.
My email inbox is filling up with experts’ views on what the new government should do to rescue Britain’s economy but here’s one that caught my attention from PwC.
It’s a video discussion involving John Hawksworth (head of macroeconomics) on immediate economic issues and where taxes are likely to rise, Jon Sibson (head of public sector) on the impact of public sector cuts and Julie Mellor (public sector partner) on the looming challenges for the state of an aging population and how this Government will need to begin to address them.
“UK markets have slumped as the uncertain outcome of the general election unsettles investors”. That’s the general tenor of mainstream press commentary today.
It’s wrong. As our economics writer points out today, gilts are no lower today than they were a month ago. Yes, shares are down – but not by as much as they are in other countries. Sterling might have fallen against the dollar, but it’s still comparatively high against the euro. Much as it might irk our self-important politicians to hear it, the rest of the investing world isn’t that interested in their partisan bickering.
So it seems nothing is to be left untouched by the hung parliament calamity. Now experts are saying that it could add £52 a month to the average mortgage!
This is because, claim flatshare website easyroommate.co.uk, all long-term lenders price their mortgages with reference to the price of gilts – or units of government debt in plain english - and mortgage rates are now rising as the cost of gilts rise.
The value of sterling has nosedived after reports suggested that no main political party had been able to establish a sufficient majority in the election.
The pound hit a 12 month low against the dollar (falling as low as $1.4597) and fell 3 per cent against the euro to 1.1547. But why has it fallen so far?
In the past, Investors Chronicle has not made a habit of telling its readers how to vote, something that I have no plans to change. That’s no bad thing, because the paucity of substance in this election campaign would make it very tough to make any recommendation. There’s no harm, however, in marking the cards of each of the main parties.
Gordon Brown did handle the banking crisis well. While Europe’s leaders sent out contradictory signals and the US Congress was paralysed by infighting, he took bold and decisive steps to stop a systemic banking crisis becoming another depression, winning widespread admiration outside the UK for doing so.
It’s been the key phrase of the last week of the campaign. But while the possibility of ‘a hung parliament’ has only ever had a very remote chance of happening, now it is moving slowly closer towards reality. Whilst hung parliaments are very rare, the opinion polls are suggesting that this is the closest run election in a generation.
And everyone has an opinion about it. From the Sun’s blunt headline on the prospect of a coalition government, “Well Hung…and Shafted” to the FT’s own thoughts on why the third placed party, which most polls suggest is currently Labour could still dominate the Commons.
Private investors themselves are becoming increasingly concerned about the potential impact on their investments of a hung parliament after the election. Markets do not like uncertainty and can become more volatile ahead of any general election.
Whilst the most pressing issue for the government in power come May 7th will be to set about reducing the budget deficit, at the same time, it should not lose sight of the importance of encouraging the savings habit in the UK.
The three main political parties each have a different view on Child Trust Funds, with Labour looking to carry on with the scheme as it is, the Liberal Democrats wielding the axe and the Conservatives maintaining the funding for the poorest third of families and those with disabled children only.