SPRING BUDGET HASN’T STEPPED UP FOR UK PROPERTY MARKET

My…we all like an upbeat headline. On that score - it's safe to say that the Chancellor 'delivered' in his Spring Budget, confirming the UK economy is now the second fastest growing in the G7, behind only Germany. Ahead of Brexit, he announced that Corporation Tax would fall to 19% from April 2017, the lowest rate in G20, and then fall to 17% in 2020 - clear signals that Britain is open for business and raring to go.

Yet for all the talk of easing the pressure on affordability in last month’s housing white paper however, Hammond’s Budget is decidedly off key to say the least. By not raising the stamp duty threshold, he has missed a valuable opportunity to improve access to the housing ladder for millions of aspiring homeowners in the UK, for many of whom the tax is the final straw when facing prices that continue to climb. Stamp duty is unquestionably a barrier to liquidity in the market and any increase to the threshold would significantly help to reverse falling home ownership numbers and transaction volumes.

The National Landlords Association aren't best pleased with the Chancellor's Spring selection box either - commenting that he has passed up his “last opportunity to reverse the damaging plans to restrict mortgage interest relief for landlords that threatens to derail the buy-to-let sector - or even to act on suggestions as to how he might ease the immediate impact”. The change, combined with other measures, such as a ban on letting agent fees on tenants, are widely predicted to leave landlords with no other option than to raise rents to compensate for unfairly increased costs.

“He still seems convinced by the Treasury’s analysis of the consequences, and it looks like he will only change his mind when the reality proves different,” says Richard Lambert, Chief Executive Officer of the NLA. “That’s little comfort to the landlords who will be forced up a tax bracket as a result of the changes or potentially forced out of business, nor their tenants who will be faced either with higher rents or the struggle to find another home in an already pressured housing market.”

There's no question that the route to homeownership for first-time buyers has to be made easier. Proposed measures to help young people acquire more skills, and potentially achieve a higher income in the long-term, are all well and good but they'll have little impact on the bottom line in the short-term. Attacking landlords and putting pressure on the private rental sector will only hinder tenants’ aspirations to get onto the property ladder. After the Tenant Tax is implemented next month, many landlords will find their tax bill outweighs their profits, forcing them to either leave the market or put up rents. Both will ultimately result in higher costs for tenants, who will then struggle even more to save for a deposit.

The Government has positioned this tax change as levelling the playing field for first-time buyers and investors, but the reality is, they don't generally buy the same types of properties. Preventing landlords from buying homes won't result in a wealth of properties becoming available for first-time buyers nor will it mean that tenants suddenly have the required deposit to buy. There's a fundamental misunderstanding of how the BTL sector operates at the heart of this policy. More to the point, it also completely contradicts the importance placed on the rental sector in the Government’s recent housing white paper. When this tax was introduced in Ireland, rents soared until the Government was forced to repeal its policy. The same will undoubtedly happen in the UK. Plus ca change.