Philip Hammond has delivered his first Autumn Statement as Chancellor. From Right to Buy schemes to the banishing of tenant fees, here are the key points relevant to landlords, tenants and the property industry:
Making housing more affordable
In an attempt to tackle the housing crisis, the Chancellor announced he will be spending £1.4 billion on improving the levels of available affordable homes, with the aim of getting as many as 40,000 on the market by next year.
Dale Anderson from Experience Invest says, “Though this will have a positive impact on the supply chain, it is yet to be seen if construction targets will be met. And even if they are met, it is not clear whether the government’s focus on first-time buyers will address the long-term housing needs of an entire nation.”
Nevertheless, an increase in supply will be welcome news for first time buyers, and it will hopefully put much-needed optimism and momentum back into the market.
Focusing on areas of “high demand”
The Chancellor also declared that the government will be setting aside £2.3 billion to support 100,000 new homes in areas “of high demand.”
Robert Nichols, Managing Director of Portico says that “High demand areas, or those popular with university students or young professionals, are already built up and very residential, so builders may struggle to find enough land in the heart of the hotspots and have to build on the outskirts.
Further regeneration and demand in these areas will ensure they are extremely desirable to buy-to-let landlords looking for high yields, low void periods and the potential for capital growth."
90,000 new properties in London
Keeping housing as a priority, Phillip Hammond also declared that £3.15 billion will be spent on 90,000 new properties in London.
Robert Nichols, Managing Director of Portico, states, “With London’s population bursting at the seams and continuing to grow, it’s vital that this promise is delivered quickly - if not, growth will continue to outstrip supply and the housing crisis will worsen.”
Tenant fees to be banned
The government will soon be banning tenant fees. It’s a move that has enraged landlords, and been brought forward despite a warning from the housing minister in September that “landlords would pass costs to tenants via rent” if the fees were abolished.
While the ban will come as welcome news to renters, Richard Lambert of the National Landlords Association has stated that “The announcement shows that while the Chancellor has affordability in mind, he has a complete lack of understanding about how the rental sector works, and will simply be moving costs around rather than reducing them.” After all, agents’ fees have to be paid by somebody.
We don’t have an exact date for when these changes will be brought into effect, but primary legislation will have to be agreed in House of Commons before it can become effective - which will certainly not happen overnight.
Right to Buy
The Statement brought further good news for those renting – this time for housing association tenants. Hammond announced that the government is pushing ahead with a Right to Buy scheme, which will enable and encourage housing association tenants to buy their homes at a discount.
Zak Arden of Survey Booker, says: "With Hammond pushing ahead with a Right to Buy scheme, we hope to see more people moving from rented accommodation to taking their first step onto the property ladder."
Losing buy-to-let tax relief - what next?
Landlords across the country were hoping that Stamp Duty and the recent tax changes on buy-to-let properties would be abolished, but the Chancellor announced nothing of the sort. This will mean that by 2020, interest relief will only be able to be claimed at the basic rate tax.
Robert Nichols thinks “This could mean that investors are less likely to grow their portfolios because of the associated higher costs, which would free up stock for first time buyers, but it could also mean a reduction in rental stock which could fuel a surge in rental values. There is still a lot of potential in buy-to-let, but landlords will now have to be creative with where they invest and how they spend their money.”
Optimising is growing
Overall, the Statement is largely positive for stimulating the housing market - but how the measures are executed and delivered will be key. For now, we will have to wait and see how things pan out.
If you’d like any more information on the market, or if you’re thinking of buying, selling or letting your property, give us a call today on 0207 099 4000. Click here for an instant property valuation!