Last week George Osborne’s Autumn Statement threw in a major curve-ball for landlords
The Chancellor announced that there would be enhanced stamp duty on all BTL and second home properties purchased from April 2016.
This news came as a real shock to the landlord community.
However, property investment is an industry that always has a silver lining for those willing to seek it out and adapt to changes, and the Autumn Statement actually sign-posted some of these.
1. Stamp Duty off-set against capital gains tax
The Treasury has confirmed that Stamp Duty can be off-set against your future capital gains tax liability when you sell your property. Therefore, you should just look as the increased stamp duty charge as an advanced payment on CGT!
2. Decrease in competition
Those who do not seek to educate themselves and believe the media negativity will leave the sector. This will reduce the stock of properties in the private rented sector, meaning that landlords who remain will enjoy increased rents and a wider choice of tenants.
3. Investment means new opportunities:
The Chancellor gave a veritable list of new property investment hotspots which could blossom following major investment:
The north has grown faster than the south
The midlands is creating jobs three times faster than london and south east
South west of England has the highest employment rates
Transport capital spending will improve by 50%. This will support the links to the”northern powerhouse”.
Energy infrastructure: Building of smaller nuclear power plants – workers will need houses.
Hull to get support for the year of culture. Part of package for “Northern Powerhouse” of which other measures of spending are being supported.
New Garden city at Ebbsfleet.
New North East business “Enterprise Zone” will comprise ten sites across Northumberland, Durham, Sunderland, Gateshead, South Tyneside and Newcastle.
4. Development opportunities
There will be increased opportunity for landlords who get involved in the development side, taking advantage of Permitted Development Rights.
5. Capital growth and increasing yields
Those landlords who adjust and adapt, and who take a long term view, could also benefit from significant capital growth as property prices are forecast to continue rising over the next decade and interest rates are forecast to remain low for a while yet, meaning yields will increase.
Additionally, net migration figures released by the Office of National Statistics this week suggest that demand for rental property is only going to increase.
Estimated net migration to the UK reached a record 336,000 in the year to June, (ONS) figures revealed.
The figure – the difference between the number of people arriving and leaving – was 82,000 more than the previous year.
Although Mr. Osborne announced a “major housebuilding programme”, the Federation of Master Builders has pointed out that already developments are being stalled or held up due to the cost of hiring skilled tradesmen and with a shortage of apprenticeships the skills problem is not about to go away.
‘Unless we see a massive uplift in apprenticeship training in our industry, there won’t be enough pairs of hands to deliver more housing on this scale. The Chancellor clearly recognises that the crisis of home ownership is inextricably linked to a crisis in house building. We therefore hope that in order to address both, the Government will do everything it can to increase house building capacity,’ said Brian Berry chief executive of the FMB.
Eric Walker, M.D. of Northwood commented:
“Once the shock of the Autumn Statement announcement has subsided, landlords will realise that there are many positives about property investment for those who take a pragmatic and long term view.
Interest rates are set to remain low, there is an increasing demand for rental accommodation, the BTL mortgage market remains extremely competitive, and yields are likely to increase. There is not the capacity to increase new homes and this will underpin house price stability and restrict supply”.
Northwood supports landlord education and learning and is a sponsor of PropertyTribes.com. Our colleagues at Property Tribes have produced this morale-boosting video, which we think is a “must watch” for all landlords:
“Like any business, there are always challenges to overcome. Those landlords that look for the positives and adapt accordingly will look back on this period in 10 years time and see it as another step in the evolution of the rental market”.
Northwood is one of the largest and most recognised lettings agents in the U.K. and the leading supplier of Guaranteed Rent to give landlords complete peace of mind.
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