By Andrea Wong, 13 March 2017
The Chancellor’s Spring Budget was a rather low-key affair to say the least. It was a statement that was met by disappointment by people up and down the country, most notably property investors, due to lack of mention of the housing market. One thing that the Chancellor did announce though is that there would be a rise in income tax for self-employers despite a pledge not to raise taxes, causing concern for landlords today.
Last month, the government published the document known as a White Paper which strategised a Brexit plan with emphasis fixing the ‘housing crisis’ and building houses with more affordable rent. Many believed that this handed Chancellor of the Exchequer Philip Hammond with the perfect opportunity to expand on the housing plans issued by the government and address the issues that the market faced. Further to this, it was hoped that he would reverse George Osborne’s implementation of the 3% stamp duty levy for property investors in 2016, even though that additional tax has not slowed the market down or deterred investors.
With no mention of the housing market, investors can rest assured that no new taxes or charges will be levied on them, and that the market remains firmly open to investment. Furthermore, another factor which remains unchanged is that tenant demand in the UK is extremely high and, with more people than ever before entering the private rental market, high quality buy-to-let accommodation will continue to be a very popular and lucrative investment for a long time to come.
The Chancellor’s maiden Spring Budget did include additional plans to distribute economic growth across the country, particularly with regard to the development of the Northern Powerhouse. He is aiming to improve different areas with huge investments in infrastructure, healthcare and education to benefit people living in the Northern regions. According to recent JLL reports, the economic outlook for the Northern cities looks bright, with Manchester City Centre considered the number one market for capital value growth prospects over the next few years.
Whilst the Chancellor failed to discuss the housing market directly, the previously mentioned Government White Paper document shed light on the situation. There seems to be a real focus on fixing the issue, as well as an acceptance that homeownership is now less common due to high-rise prices. In response to the White paper, Green Party member, Sian Berry was full of optimism: “I’m pleased to see the Government is at last catching up with the real world on renting. We have suffered from years of obsession with homeownership and a long list of failed policies such as ‘Help to Buy’, shared ownership and starter homes”.
With the UK buy-to-let market going from strength to strength and rental accommodation demand high, especially within the regions of the Northern Powerhouse, investors should not be concerned by the relative lack of airtime given to housing in the Budget. Homeownership is out of reach for many ordinary UK families even with extra support from the help-to-buy scheme, paving the way for even more growth in the private rental market to come.