George Osborne has been busy over the last year. First came the General Election which had everyone on tenterhooks until the last minute; then there was the Queen’s Speech and in July he delivered his first Budget as Chancellor of a majority government.
By November he was back at the dispatch box for the Autumn Statement. And at every juncture, there was an impact (not always positive) for those involved in the residential lettings market.
So as the recent Budget approached and George got ready to deliver his eighth Budget, it’s fair to say that the industry hoped for no further blows.
Indeed, media speculation suggested a quiet budget for the property sector and on the day attentions were firmly on education before swiftly shifting to sugary drinks!
The lettings sector let out a collective sigh of relief… or did it?
Larger buy-to-let investors perhaps weren’t so relieved once it was confirmed that they too would be included in the increases to Stamp Duty which come in to effect on April 1.
The extent to which this will truly affect them, however, is a matter of personal opinion.
Seasoned investors tend to focus primarily on capital growth and are confident of the medium to long-term stability of their investments.
The short-term pain for them is outweighed by the longer term gain, so whilst they may have hoped for exemption, their inclusion in stamp duty increases perhaps isn’t as critical as it could be.
Smaller buy-to-let investors, meanwhile, will at least be reassured that everyone is being treated the same – even if they don’t like what it means for them!
Then there was Capital Gains Tax (CGT) which was the great unknown as we approached Budget Day. It was speculated that there would be a cut to CGT, but whereas some pre-budget speculation is as near as it can be to fact, this was the one that had the market left wondering.
The announcement was made that whilst it would be cut, at both the higher and basic rates, the sale of residential property would be excluded from the new legislation.
Many in the sector view this as another blow to landlords looking to offload parts of their portfolio.
Certainly, in the wake of other recent changes to the lettings sector, a reduction in CGT wouldn’t have gone a-miss. But would this have simply been a ‘nice to have’?
Landlords selling a property today aren’t any worse off than they were before. Another headline that, in effect, will have little real impact to the lettings sector.
What we should perhaps be concerned about instead is the future.
In a few short months we will again go to the polls to decide whether to stay in the European Union.
The case for and against isn’t something I shall go in to now.
What I will say is that at this times like this, questions get asked, uncertainty can rear its ugly head and depending on how the media reports this, it can negatively (albeit temporarily) affect the housing market.
As an industry we need to focus on creating as much stability for both tenants and landlords as we can.
The Budget didn’t drop any major unexpected bombshells, and for that the residential lettings sector should be grateful.
*David Westgate is Managing Director of Andrews Letting & Management