That’s the relaxed attitude of Edinburgh property expert Matthew Gray as homeowners enter uncharted territory as the latest piece of Scotland’s housing revolution clunks into place.
Gray has spent his entire career in the property game, earlier this year helping set up a new law and estate agency firm, Gilson Gray, so he has been strapped in to the roller coaster of Edinburgh house sales in recent years.
Therefore, dealing with change is presumably part of the job and big changes are on their way.
Last week Finance Secretary John Swinney unveiled his plans for the new Land and Building Transactions Tax, which will see a big hike in taxes for more expensive houses and a drop for cheaper ones.
Earlier this year, MSPs voted to end the Right to Buy scheme, which had turned so many people from council tenants into property owners since its launch in 1980, in 2016.
And this week, the Scottish Government announced the cap on the value of homes eligible for its Help to Buy scheme would be cut from £400,000 to £250,000. The scheme, under which the Government takes a stake of up to 20 per cent in a house if the purchaser can’t afford a mortgage for the full amount, was designed to stimulate the housebuilding industry as well as help people up the property ladder and proved so popular it cost more than expected.
Says Gray: “After the peak in 2006 we needed a reality check, but it’s still very hard for people to get a mortgage and to save enough for the big deposits lenders need.”
A new study from Stirling University bears this out, showing the market is increasingly dominated by over-45s and more younger people are waiting for inheritances not just to fund deposits but to buy properties outright.
“But people still need to move house so there will always be a market,” adds Gray.
“The new LBTT system might unsettle things in the short-term but it will settle down. What would really hit the market would be the introduction of Capital Gains Tax on main residence sales, but thankfully there is no sign of that happening yet.”
He also dismisses the pre- referendum fear of a mass exodus of top earners and a resulting collapse of house prices.
“Where were they going to go? The red-eye flights to London on a Monday are already full of people who have made a lifestyle choice to stay here because it’s a great place to bring up a family, but work in London.
“In London you can’t get your kids into good schools and if you found a house you liked and could afford, you’d face three hours commuting every day.”
But reports earlier this week suggest more than a few in the trade are breathing a sigh of relief at the result while gearing up for another period of uncertainty, even if less severe than many feared.
The total effect of all of the recent measures is hard to predict, but the two latest will be most keenly felt in Edinburgh, where according to the Edinburgh Solicitors Property Centre the average house price is already £220,174 and a typical three-bed semi costs £260,000.
It is estimated LBTT will see people buying a house worth less than £325,000, paying less tax than the UK Stamp Duty it replaces, which in Scotland is about 90 per cent of all sales. So with just a tenth of house buyers paying more it’s not difficult to see why Mr Swinney wasn’t taking a political gamble.
But in Edinburgh, with the average price of a four-bed semi now at £399,485, 17 per cent of all house buyers in the Capital will pay more tax after April. But that 17 per cent represents around 38 per cent of the total value of sales. While there might not be a stampede, there is now an incentive for those selling more expensive homes to get on the market in enough time to beat the hike.
With timing based on completion, top-end estate agents such as Rettie and Knight Frank are expecting a very busy Christmas to get sales signed off before the cut-off when the tax payable on a £1 million house purchase (79 of them in Edinburgh last year) will go up from £50,000 to £120,000. But even those buying a £400,000 house are in all likelihood counting every penny and the extra tax, up from £12,000 to £17,300, must come from savings or the equity of the sale of their existing home because it can’t go on the mortgage. I’d wager £5000 most people would rather spend it themselves than give it to Mr Swinney.
Add the effect of the reduced cap on Help to Buy and it points to a big squeeze in the middle, which seems the politicians’ favourite target.
At the same time there is a balancing incentive for people looking to buy a property below £325,000 waiting until after April so they can make a saving. The difficult trick will be deciding whether to wait to save on LBTT but risk paying more if the price goes up.
Prices at the bottom of the market have proved volatile since the high-point of 2007, small flats in places such as Gorgie/Dalry five per cent up at £103,000 could easily slump before April and then rocket in late spring. But the closer you get to the magic £325,000 tipping point, the more marginal the gains become. In places such as Marchmont where an average two-bed flat is up eight per cent to £274,175, there could be little benefit in hanging about.
Some people are willing for the nascent property recovery to end and for a continued slump to make more homes affordable, but that ignores the fact that many people have their financial futures tied up in their property because of the poor value of many pension plans.
With their savings locked up in their homes, they need healthy prices to generate enough cash to pay for a secure, mortgage-free retirement.
This week’s announcement that inflation was down to a five-year low of 1.2 per cent might sound like good news if it staves off an interest rate rise. But ultra-low inflation keeps wage deals down, which caps spending – and it means continued poor returns from savings which hits pensions. It also means debts don’t melt away. Doesn’t sound so good now, does it?
And remember much of the low inflation is caused by falling fuel prices, with Brent Crude now at a four-year low of just over $80 a barrel.
Great news at the petrol pumps, but not so good for North Sea tax receipts and anything which is bad for tax receipts is bad news for tax payers.
Which brings us back to the single largest asset most of us have – our homes.
These are not dripping roasts for politicians or the tax-man to plunder at will without consequences – but our future security.
NIMBY party is missing the point
THE beginnings of a Nimby party might have been signalled this week, inspired by former Edinburgh Labour councillor and SNP candidate George Kerevan.
The ex-economics lecturer used his column in this week’s Scotsman to call for a city-wide political movement to fight the new Local Development Plan and put up candidates at local elections and presumably block development wherever the Nimby party holds sway.
Like other examples of populism, it could have a fair chance of some success, given the kind of hysteria whipped up by the opponents of Edinburgh Accies, Caltongate and Craighouse to name three.
What has inspired Mr Kerevan is the prospect of a major housing development on his doorstep in Brunstane and as befits a former Scotsman leader writer he raises the spectre of dodgy goings-on without actually accusing anyone of doing anything untoward.
He writes: “This is a classic case of council intrigue, big business and land deals – one rife with allegations of political manipulation and conflicts of interest.” And he continues: “The affair is rife with perceptions of institutional conflict of interest and lack of transparency . . . particularly as the council stands to gain financially . . .”
Great stuff, George. Where he has a point is that before building on greenfield farm land, old industrial sites such as those at Leith and Granton should be used first and the abandoned Granton tram line is needed to give house-builders an incentive to return.
Interest from developers near the new stations along the Borders rail link closer to Edinburgh prove transport is key to spreading development.
However, there are three key points for Mr Kerevan to remember. First, there is no money to build the Granton tram spur. Second, the Leith site is owned by Forth Ports which is concentrating on industrial development.
Third, even with available sites developed, the city is still well short of government targets and housing shortage is a real problem right now.Whether Mr Kerevan’s party appears before the next elections is one thing, whether the Greens allow their thunder to be stolen is another.
Unemployment divide there to see
The latest unemployment statistics are another welcome sign that the economy is well on the road to recovery, but continue to provide stark illustration of the contrasting challenges facing different communities across the city.
The most startling is that in two constituencies, Edinburgh Southern and Western, the unemployment rate is so low as to be statistically insignificant.
But in Edinburgh Eastern, including Craigmillar and Niddrie it is 10 per cent. If anyone is looking to understand why more people voted Yes in this area than anywhere else in Edinburgh - 47 per cent against a city average of 39 per cent - look no further.
Yet the percentage of economically inactive working age people is lower in Eastern at 20 per cent than Western (25 per cent) or Southern (26 per cent).
The probable explanation is the number of 16-18 year olds still at school in more affluent districts and the number of people who can afford not to work or claim benefits. And I doubt they have trouble keeping up their gym memberships.
Always a future for a hardworking journalist
Some of the greats of Scottish journalism gathered this week to say farewell to one of the best political editors the Evening News nearly had.
Back in the 1990s when the paper was looking for an experienced reporter to replace the long-serving Ken Smart, the legendary figure of the Sunday Mail’s Angus MacLeod was all set to sign up.
Angus had been the epitome of a hard-drinking, chain-smoking writer but by then had left his hedonistic days behind and was ready for a new challenge. But the human resources department took one look at his health record and his Evening News career was over before it had started.
But as one of Scottish political journalism’s most respected figures, he went on to become a regular pundit on the BBC and political editor of The Times in Scotland before finally taking over as its editor two years ago, a position he still held at his death last week.
He confounded our HR people by nearly 20 years which shows that where there is determination, innate talent and good humour there is always a future.