In offering readers my best wishes for 2019, I must add the caveat that the arrival of spring will be later this year and that it may not come about at all.
Climatically, of course, the grass will begin to grow, the cherry trees blossom and the evenings become increasingly lighter. For the economy, and therefore the property market, however, spring seems like being put on hold. As for the reason why, well, the clue is in the following figures.
The spring (or vernal) equinox will fall on 20 March, which of course is nine days before the United Kingdom is due to leave the European Union. With a final deal between the UK and the EU still to be settled and the clock ticking fast, business confidence has undoubtedly been adversely affected and, historically, this has always rippled out to the volume of house sales. In early January, few people put their houses on the market, unless they are emigrating, moving to a new job in another part of the country, getting divorced or urgently need more spacious accommodation. But with the Christmas and New Year break behind them, those with a desire to move for reasons other than an absolute necessity are usually starting to think about it.
This year, I suspect, will be an exception as home-owners sit on their hands and wait to see what Parliament eventually decides what to do about our future relationship with the EU. Personally, I do not believe a no-deal Brexit will be the car crash many are predicting but perception has a huge effect on the intentions of ordinary people and if they believe that spring, summer, or indeed the whole of 2019, will be clothed in uncertainty, then moving house – which involves a financial transaction bigger than any other they are likely to make throughout their lives – will almost certainly be put on hold.
I still fervently wish the British public had never voted to leave but we are where we are and if this year is to experience an economic spring then Theresa May’s proposed deal is the one and only key to that happening. True, it does not satisfy dedicated Remainers or Brexiteers but to me it seems the only sensible option on the table. Given its hostility to a hard Brexit, the acceptance by Parliament of the May deal would be regarded – in the circumstances – by the business community as a lifeline that can be built upon.
Consequently, how the House of Commons votes next Tuesday (having been delayed for December) also has huge implications for the housing market. And should it be voted down – as everyone seems to be predicting – where we go from there is anyone’s guess.
Of course, it is not only fears of a no-deal Brexit that is having a negative effect. Some regular readers of this column might think I tend to bang on a bit but the effect of Land and Buildings Transaction Tax (LBTT) rates on sales of higher-priced houses and flats in Scotland cannot be underestimated.
In the old days of stamp duty – when the tax on lower- and higher-priced sales was more reasonably balanced – some professional city-dwellers would, at this time of year, be thinking of moving their families to the coast or country. If based in Edinburgh it would be to North Berwick, Gullane or a Borders village; if Glasgow to a rural hamlet in Renfrewshire such as Kilmacolm or a seaside location like Wemyss Bay or Helensburgh.
But LBTT has largely put a stop to this. Not just because of the way it adds to the cost of the initial move but, also its added effect on the expense of moving back to the city should things not work out.
In calling for reform of LBTT I have always maintained that tax should be cut on higher-end sales without raising rates at the lower end to compensate. Rather than reduce revenue this would actually increase it by encouraging more higher-end transactions – as Mrs Thatcher proved beyond doubt with her reforms of income tax back in the 1980s.
David Alexander is MD of DJ Alexander.