Autumn Statement 2016 What does it mean for the property market?
Philip Hammond recently delivered his first Autumn Statement as Chancellor since taking over from Northern Powerhouse enthusiast and Tatton MP, George Osbourne. How has he put his own stamp on the economic announcement? Here are the key points relating to the property industry.
More affordable housing
One of the big announcements from the most recent statement was the investment of billions of pounds into hundreds of thousands of new build properties. The Chancellor unveiled £1.4 billion will be made available to tackle the housing crisis with an initial target of 40,000 ‘affordable’ homes to be completed by as early as next year.
Another £2.3 billion has been assigned to a Housing Infrastructure Fund to support 100,000 new build homes in “areas of high demand.” However the biggest investment has gone to the Affordable Homes Programme in the capital. £3.15 billion has been set aside to be spent on 90,000 new and affordable properties in London by 2021.
The additional funding close to £7 billion should help the Government achieve its new-build homes target by 2020. The question is, with demand still outstripping supply so significantly will it be enough?
Low interest rates are great, if you already have a mortgage and are on the housing ladder. If you are one of the many trying to save money to put towards a deposit, it is not so helpful. The Chancellor has announced a new NS&I savings bond that will offer a return of 2.2% over a fixed three years with a maximum contribution of £3,000.
This is in addition to other savings schemes such as the Help to Buy ISA as well as the Lifetime ISA and Help to Save scheme, due to launch in April 2017 and April 2018 respectively. It is also worth mentioning that the annual tax free ISA allowance will increase from £15,240 to £20,000 in April 2017.
Up front tenant fees to be scrapped
In a move that has caused quite a stir in the property industry, Mr. Hammond announced that there will be a ban on the charging of tenant fees “as soon as possible”. Despite being advised against a move to ban tenant fees by the housing minister in September, the Chancellor has made his decision.
Richard Lambert of the National Landlords Association has stated that “The announcement shows that while the Chancellor has affordability in mind, he has a complete lack of understanding about how the rental sector works, and will simply be moving costs around rather than reducing them.” There is no official date that has been set to bring about this change, however it will be something that has to go through the House of Commons first of all, meaning it could be a while yet before we see this announcement put into action.
Right to Buy
It was good news for housing association tenants. The Statement announced that the government would be going forward with a large scale regional Right to Buy scheme. Hammond commented that the scheme would allow a further 3,000 tenants to buy their own home at a discounted rate although there were no specific dates mentioned in the speech.
Buy to Let Tax Relief
For all of the positive strides made in the Autumn Statement there was no recalling of the recent tax changes for buy to let properties and Stamp Duty increases on second homes. To the dismay of much of the industry this will mean that by 2020, interest relief will only be applicable at the basic rate of tax.
homes4u Manchester city centre branch manager Ripon Abdul says “With the interest rates remaining low, buy to let properties can still offer better returns than the banks. The most important thing to do if you are considering investing in property is do your research. Getting advice from property professionals with specific investment experience, such as our sales team at homes4u is key to being successful.
There are a reported 40,000 properties due to be built over the next 10 years in Manchester city centre alone. With an ever growing population, world class universities and top ranking businesses, demand for property to rent is at all time high making Manchester an Investment hot spot.
We are currently marketing a selection of exciting investment possibilities, including Quay House in Salford which is being offered on a sale and leaseback agreement. The development has been completed by the developers and each apartment is sold subject with the advantage of a five year full repair and maintaining lease and a 5% return. The development has proved extremely popular and four apartments were SSTC within the first week of marketing.’
If you would like to be kept up to date with investment opportunities you can contact Ripon directly on 0161 236 0202 or email firstname.lastname@example.org.
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