There has already been plenty of discussion about what an Andy Burnham government means for the housing market, particularly when it comes to property taxation, possible stamp duty reform and whether we might eventually end up with a completely different system for taxing property and property ownership.
Burnham himself has subsequently moved to dampen some of that speculation, making it clear we should not expect major property tax changes in the short term, and I can understand why he felt it was important to provide some certainty rather than allow speculation to continue unchecked all the way to the end of October Budget.
Last year’s experience tells us very clearly what allowing even the prospect, or rumours, of changes to stamp duty can do. In essence, you run the very real risk of buyers and sellers waiting, because why would you complete a purchase today if you think doing so several months later might save you thousands of pounds?
However, Burnham ruling out immediate major reform should not mean this government simply leaves everything as it is, particularly with just two months to the Budget, at which this administration is presumably intending to show just how different it is to the one they replaced.
This government needs to show what is different
We might have the same Labour Party in power and be in the same Parliamentary term, but politically this is a new government, with a new Prime Minister, different people occupying key positions and, one would assume, a different set of priorities which will need to become clear relatively quickly.
The Budget therefore represents one of the major opportunities for Burnham, chancellor John Healey, and the government to show what those differences actually are, and housing would seem an obvious place to start given the importance of the market to the wider economy and Burnham’s own comments about future property tax reform.
I completely accept those wider changes cannot happen overnight, because if the government is considering fundamental reform of property taxation, potentially involving several existing taxes and changing the way they interact, then getting from where we are today to a completely new system is going to require considerable thought, consultation and political work.
The important question, however, is what should happen while the government works all of that out?
Give the market a bridge
Rather than waiting for the finished property tax plan, why not use the Budget to provide a bridge between the system we have today and whatever Burnham ultimately decides should replace it?
That could mean increasing the stamp duty threshold for first-time buyers, potentially to £750,000, which would make a meaningful difference in London and other higher-value parts of the country where existing thresholds increasingly bear little relation to the prices buyers actually face.
It could also mean specific relief for older homeowners who want to downsize, because we currently have a ridiculous situation where somebody can want to move from a large family home into a smaller property, yet the stamp duty cost involved makes remaining exactly where they are the better financial decision.
We should therefore hardly be surprised when larger properties do not come back onto the market for growing families, because the tax system is actively creating a financial reason for some existing owners not to move.
Stamp duty is fundamentally a tax on movement, and if the Government genuinely wants more transactions, greater housing mobility and a healthier distribution of the housing stock, then reducing some of those barriers should be an obvious place to start.
Don't put the market on hold
There is also a clear danger in telling people that wider property tax changes are coming at some point in the future without giving them any reason to transact in the meantime, particularly when we are already seeing a marked difference in activity across different parts of the market.
First-time buyer interest remains relatively strong, but once you get into higher property values, particularly above £700,000 the market can look considerably quieter, and the last thing we need is another reason for potential buyers and sellers to sit on their hands.
This is why meaningful stamp duty reform at the Budget could be the rabbit from the hat, providing an immediate reason for people to transact while giving the government the time it needs to decide whether its wider property tax ambitions are practical and exactly how they should eventually work.
It would also allow the government to see what happens when you reduce some of these barriers, because if transaction levels increase significantly and overall receipts respond positively, that evidence should clearly inform whatever permanent system Burnham ultimately considers.
Use the political capital while it exists
Burnham should also recognise the political position he currently occupies, because a new PM is unlikely to have more authority or freedom to act than during this opening period of a premiership, particularly when there is still time before the next General Election for policies to take effect.
There is an obvious lesson from Starmer and Reeves, who arrived with a huge Parliamentary majority but quickly became associated with difficult and unpopular decisions, losing much of the political goodwill which might otherwise have given them greater freedom later in their term.
Burnham has an opportunity to approach things differently, and the Budget gives him an early chance to show that this is not simply the same government with different people sitting around the Cabinet table.
There has already been talk about supporting new-build activity and a return to such measures as Help to Buy, and while those could clearly have a role, we need movement throughout the entire housing market, from first-time buyers entering it through to growing families moving up and older homeowners being able to downsize.
Burnham may have ruled out major property tax reform in the short term, but he should not mistake that for a reason to do nothing until every detail of any long-term system has been decided.
The Budget provides an opportunity to introduce a bridge, reduce some of the costs which stop people moving, generate significantly higher transaction levels and give the government breathing room to work out what its wider property taxation plans should eventually look like.
There will be time to work through the longer-term reforms, but there is an opportunity right now to support the housing market. Even now the end of Burnham’s Golden Probation Period is coming, and I would urge him not to make the same mistakes as his predecessor; instead build goodwill, optimism and give yourself options with stamp duty.
