Budget response – our insider review and what it means for you
Phillip Hammond delivered his first Autumn statement recently as the new chancellor, from right-to-buy schemes to the abolishment of up-front tenant fees, the list was yet again another blow to landlords with no light at the end of the tunnel. The measures they are trying to take each time round are to scare landlord’s into selling up in an attempt to free up housing; a lack of which some say is largely down to the government’s bad management of building affordable homes in the UK. Below we’ve outlined some of the key points of his statement that are most relevant to landlords.
Buy to let tax relief
Landlord’s up and down the country were hoping for a mention on the reversal of stamp duty charges on second homes, or cuts on mortgage tax relief for rented properties, however there wasn’t any mention of either. To the dismay of many, this means that from 2020, interest relief will only be applicable at the basic rate of tax and the 3% stamp duty for second properties will stand. Since the announcement in April there has been a decline in the number of landlords buying investment properties. There may be many landlords who are now forced to leave the market However, here in Brighton we haven’t seen much of a change, due to the shortage of housing here for students and the rental yield’s that Brighton properties achieve, landlords are still keen to invest.
Tenant upfront fees to be banned “as soon as possible”
The term ‘upfront tenant fees’ is very vague at this stage – the chancellor hasn’t been very clear on what he means by this and when the ban is due to start. Where he clearly has affordability in mind, he also clearly has no idea how the rental sector will react. His aim is to reduce moving costs for renters and although it may reduce initial moving costs the industry will adapt so costs can be met elsewhere. Some industry professionals have said that the costs will be passed onto landlords who will in turn increase rents to swallow their increased costs. This would ultimately leave tenants further out of pocket over the length of their tenancy. We will need to wait until primary legislation is moved through parliament to fully understand what he means by ‘up front tenant fees’ as it is very unclear.
It is the opinion of many industry recognised bodies and professionals that a better approach would be to cap fees to section-out rogue agents and landlords who charge very high fees, which the legislation was aimed at initially. This would be a more sensible approach and less likely to affect rent prices or agent landlord fees. MTM are keeping their eyes firmly on the chancellor’s movements and won’t make any decisions before clarification on terms. We’ll keep our landlords informed of the changes as we learn more about them.
No further update on this, as mentioned in the previous statement, from 2019 vendors will need to pay their capital gains tax within 30 days of completion of the sale on residential properties. There are many questions flying round unanswered on how the government are going to perform the administration on this. Again, we will update our landlord’s as we learn more about this down the line.
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