The Autumn Statement had, as expected, a key focus on what is commonly referred to as a “housing crisis”. Lack of affordable homes continues to be an issue, along with the inflated house prices that make it virtually impossible for first-time buyers to get the break they need. Landlords are still very much in the firing line for government attempts to dampen activity in this sector.
Autumn Statement 2016
The government has identified housing as a big structural weakness for the UK economy.
Therefore, one commitment from the 2016 Autumn Statement is for a £2.3 billion to be invested into new housing infrastructure, particularly in those areas where there is a lack of available houses.
This fund would be utilised to improve roads, schools and other necessary local infrastructure to enhance demand, and ease planning hurdles for property developers.
Are things looking up for first time buyers in 2017?
The Help to Buy equity loan scheme has been extended and the new Lifetime ISA due to launch in April 2017, are evident that the government are trying to give first-time buyers the help they need to get on the property ladder.
If you are a contractor, freelancer or owner of a small business, and are looking for your first home, it is probable that you will be experiencing difficulty in making this a reality though.
Even with a reasonable contract day-rate, or if you are making a consistent profit from your small business, it is hard to save the money needed for a deposit. Particularly, for property in London and the South East, which has seen an exponential increase in value in the past few years.
The Chancellor committed £1.3 billion for 40,000 new affordable homes to be built. This could be an option for hopeful homeowners to take advantage of options like shared ownership.
Other than that, house prices have stabilised in recent months, so this could be a glimmer of hope if you are looking to buy your first home in 2017.
The attack on landlords continues
The new mortgage interest rules come in from April 2017, restricting the amount of mortgage interest landlords are able to claim back against their rental income.
This is already having a huge effect on property investors, as it is possible many will see profits dwindle, or be forced into higher rate tax brackets.
Subsequently, many have chosen to sell-up, to avoid tax issues next year. Others have to be cautious about future purchases so they don’t exceed certain tax thresholds. Not to mention, the Stamp Duty Land Tax surcharge on second homes that comes into the equation now.
The Autumn Statement announced a further hit for landlords, as they are now to cover the vetting and administration costs that were previously passed onto the tenants by estate agencies. This new ban demonstrates further that the government are moving towards making property investment an option really only for those that can afford it.
If you own a buy-to-let property, or are considering one in the New Year, seek professional advice. The squeeze on lender affordability on mortgage applications is also proving a hurdle for property investors.
Use a specialist mortgage adviser that knows the best place for contractors to obtain mortgages for their home or investment property.
Who suffers in the end?
All in all, these measures against landlords are expected to help the first time buyers move from being renters to become property owners.
Although, with many landlords passing on the extra costs they incur through rising rent rates, it is hard to see at this stage how renters can then find more money to save for the deposits they need to purchase.