In the build up to the Budget, landlords and buy to let investors must have been quietly dreading what comes next after stamp duty hikes and the removal of certain beneficial tax reliefs by the previous chancellor George Osborne.
As the details of this latest Budget are pored over in the next few days, the good news is there will be nothing much to add to the pain already inflicted on property investors.
This Budget was clearly about playing it safe in the run up to Brexit and continuing a punishing austerity programme which has been around so long it would be hard to imagine a time when we didn’t live under the shadow of austerity.
The current Prime Minister will continue to preside over a nation and economy still frozen in time as the Chancellor fired a few shots across the bows of the self-employed with a hike in national insurance contributions. Wine and cider drinkers may also be swallowing another rise in tax on their drinking down the wrong way.
So in an effort to pore over the boring details ourselves, here are the 7 things this Budget didn’t do for the property market:
- It didn’t reveal more investment in affordable housing
Affordable housing has become something of a hot potato as successive governments continue to miss affordable house building targets. The UK has a huge shortage of housing and the gap between supply and demand is widening every year. Labour leader Jeremy Corbin said, “Since 2010, housebuilding has fallen to its lowest rate in peacetime since the 1920s. The building of social homes for rent is at its lowest level for a quarter of a century.” Fortunately the national housing shortage is the reason why property continues to be an excellent long term investment.
- Stamp rates duty stayed the same
There are more people paying stamp duty than at any time in the past 10 years. This is not surprising when you consider that most house are now in the stamp duty bracket. Yes more money will need to be spent paying the duty, but the returns from buy to let should still make property more than worthwhile – even in Prime Central London where the super wealthy have supposedly been adjusting to the charge since last April.
- It didn’t stop buy to let investors losing a big tax perk in April
Buy to let investors won’t be able to offset the full cost of their mortgage interest against rent anymore. We all knew that anyway. Only 75% of interest will be deductible in 2017/18
- Working class people gained nothing other than a bit more spending money
The government is continuing to ignore the impact static wages have had on most people’s standard of living. Nothing much was done in the budget to address this issue of the rich getting richer and the poor getting poorer. An extra £500 a year saved on tax is a drop in the ocean for most people when their savings accounts return next to no interest. This is what makes investing for the future so important in the current climate.
- The self employed got a bit less spending money
Britain’s growing number of self-employed will soon find themselves worse off than those in employment. It now appears that a self-employed person gets none of the perks of employment and equal amounts of tax to pay. If that self-employed person happens to be a landlord too, then the extra tax burden will probably result in higher prices charged for services.
- It didn’t stop landlords switching ownership of property to companies
Landlords can still switch ownership of properties to their companies to avoid losing tax relief.
- It didn’t make owning property anything more than a pipe dream for most under 30s
One thing is certain, younger people will continue to find it hard to get on the property ladder with property prices high and various taxes impacting on their ability to save enough. This will add to rental property demand both now and for the foreseeable future.