The Government’s autumn budget is set to enforce a variety of changes that will ultimately have an impact on the UK property investment market. Although as of this moment, we’re still unsure what exactly the changes will be, experts are beginning to suggest what that may mean for the market, including buy-to-let property investors and their investments. We have created a list of the likely changes as a result of the budget, and what impact they may have.
A Change to UK Planning Laws
Many builders and housing associations have been calling for the Chancellor to make changes to the UK’s planning laws, making it easier for planning permission to be granted for new construction projects, as well as influencing the type of properties being built in the future. Such changes would allow for high-rise properties to be produced to the same height as the tallest building in the area or the height of trees within the area. This would be particularly beneficial to these businesses that are located within London, helping them to work within the land that is available.
Reforming Stamp Duty
A whole variety of influential and highly regarded individuals and organisations, such as the HomeOwners Alliance, are suggesting that Stamp Duty should be subject to reforms. Amongst the recommendations are the raising of thresholds to correspond with house prices, exemption for first time buyers and even making Stamp Duty a tax that applies to property sellers rather than property buyers.
Exemption for first time buyers and older property owners would be seen as more of a statement policy as opposed to large financial benefits, especially following the election results in the summer, yet it would surely be appreciated by those benefiting from the change. By placing the tax onto the sales side of the process, it is thought that first time buyers are likely to be less burdened with it, whilst also seeing the property seller pay a smaller amount due to it being applied on a cheaper property price when compared to the high priced on they are about to pay for their new property.
Preventing Buy-to-Let Investors from Purchasing Through Companies
With various changes to the way investors can make their investments, particularly relating to offsetting interest against income and higher rates of capital gains tax, investors have been searching for ways to get the best out of their investment financially. In recent times, more and more investors have been setting up new companies to make their investments, allowing them to offset their mortgage interest.
It is widely thought that Chancellor Philip Hammond may look to apply the same rules to investors operating via companies, preventing them from offsetting their mortgage interest against income. However, taking such steps may cause further implications to the property market as many businesses may see their business model suffer, causing issues to tenants and the wider market as a whole.
Introducing Longer Tenancy Agreements
There has been a big push by the Government recently to better the current rental market for tenants, and one of the biggest issues is the short length of tenancy agreements. Introducing longer tenancy agreements would be something that both landlords and tenants could benefit from, with landlords seeing tax-based benefits and tenants benefiting from more secure, stable and long-term living arrangements.
Energy Relief
With the new Minimum Energy Efficiency Standards set to be introduced in April 2018, landlords are required to ensure that they make the relevant changes in time to prepare their property for the new regulations. With that April deadline getting closer and closer, many landlords have to spend money to enhance the energy efficiency of their property; else they risk not being able to let it out to tenants. A suggestion from industry experts is that the Landlord’s Energy Savings Allowance should be reintroduced, allowing landlords to offset energy related costs against the taxable income that they make.
Helping To Build More Homes in the UK
Although there are many different reasons that affordable homes are few and far between within the UK, the fact that local councils are not allowed to borrow to build properties within their local area has not helped whatsoever. Should the Chancellor answer calls for local councils to be able to borrow money to fund the building of homes, the housing shortage problem will begin to diminish.
Another way to help build more homes within the UK is further investment into the construction industry, including for additional training opportunities, meaning that a new wave of electricians, bricklayers and other skilled workers would be introduced.
Author Bio
Hopwood House are specialists in property investment, with a large portfolio of UK property investments in the student property, care home and buy-to-let investment markets.
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Daniel Peacock