BUDGET 2017: WHAT’S THE OUTCOME FOR BUY TO LET?
The annual Budget announcement was delivered by the Chancellor of the Exchequer on Wednesday 22nd November. This year, there has been much speculation about what would be announced and how the government planned to address the necessary changes to the housing market as well as tackling all other important economic factors.
Now we know what is in store, we take a look at how the predictions stacked up against the governments new plans, and how it may impact the property market, and what buy to let investors specifically may need to know:
What was predicted?
- Longer tenancies: As a means of benefitting both landlords and tenants, there was expected to be new tax incentives introduced for landlords who offered longer term tenancies from the offset to their tenants. With half of all buy to let mortgages accepting offers of those with a rental lease of two years or above, it’s thought there may be scope to open this up to investors who have faced a number of new tax laws in recent years.
- Energy relief: The Landlord’s Energy Savings Allowance, or LESA, was revoked in 2015. However, prior to the announcement it was rumoured that this may be reinstated to encourage energy saving measures once again in rented properties.
- Housebuilding: The housing shortage has certainly been at the forefront of the Conservative Party policy this year – the Prime Minister has previously stated while there is a lot to do, she will make it her personal mission to oversee the housebuilding activity. We’re all aware of the chronic need for new homes, but what exactly the government plan to do was eagerly awaited in the Chancellors statement.
- Stamp duty break: The main focus was firmly on a potential holiday for first time buyers who are struggling to get on the ladder. However, there are still a number of campaigners looking to abolish stamp duty altogether due to its overall adverse effect on the economy, this includes some heavyweight campaigners such as The Telegraph.
What is the outcome?
While there appears to have been little mention of buy to let in the announcement from the Chancellor, housing was a priority within the agenda and saw a number of key mentions throughout.
- Delivering more than just a tax break, the Chancellor announced a complete abolition of stamp duty for first time buyers on house purchases of up to £300,000, aiming to ease some of the financial strain aspiring home-owners face.
- The number of new homes set to be built was also addressed, with the Conservative Party aiming to build 300,000 new homes every year, the biggest recorded increase in housing supply for 40 years. Pledging to also conduct an “urgent review” of the gap between developments approved at planning and those which never come to fruition, this will hopefully free up land in urban areas where property is needed the most – great news for key cities such as Manchester and Liverpool that are likely benefit as a result of this.
- While there was only a small mention of encouraging landlords into longer tenant leases, we could see changes on the horizon for buy to let tax relief as a result in the near future.
Overall, the government has pledged to invest £44 billion into the housing sector which could go a long way in restoring the supply and demand issue we currently face in the UK. The lack of suitable housing stock has likely played a part in rising house prices, particularly in now completely unaffordable areas of the UK, such as London.
Managing Director of Sequre Property Investment, Graham Davidson, comments on the issues addressed in the Budget announcement and what could be in store for buy to let’s future:
“The spotlight was firmly predicted to shine on the housing sector and the Chancellor did not disappoint. It’s exciting to see the government really getting on-board with the challenging property market and keen to address the property shortage we are currently experiencing across the UK.
“For buy to let landlords, there was a vague nod to offering longer tenancies in rental agreements which may result in some welcome tax relief, but the outcome will remain unknown until the newly promised consultation goes ahead. Despite a challenging few years for the buy to let sector, investors in the north have remained relatively unscathed despite the previous changes to SDLT and mortgage relief; this longer tenancy would not only be of benefit to landlords in terms of minimal void periods, but also their earnings. This, combined with strong capital growth potential is likely to serve as a further boost for buy to let activity in urban cities such as Manchester and Liverpool where more new homes have been promised.
Unfortunately for the London market, so much red tape and astronomically high house prices means it’s unlikely this will be enough to result in an attractive property investment.”
At Sequre, our team of property professionals ensure they are always up to date with latest market trends so they can offer you the best possible advice and guidance for your buy to let purchase. Property remains the best performing asset class in the UK, and with the discounts we source on our developments, you could be looking at making an instant profit on your investment. To find out more, give us a call today on 0800 011 2277.