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This week, the Chancellor of the Exchequer, Philip Hammond, delivered his first Autumn Statement. Which will also be his last following the announcement he is scrapping the Autumn Statement and spring Budget in favour of one Budget a year, which will take place in the autumn. A bold move for the new Chancellor. However, no bold moves were made when it came to reversing the stamp duty land tax (SDLT) reform of the 2014 Statement, as was widely hoped for by the industry.
A Housing White Paper is expected to outline further detail on how the government will address housing at all stages of life, across all tenures, but for now announcements included a £3.7billion total housing spend to build 100,000 homes in areas of high demand and 40,000 more affordable homes. There will also be a ban of unregulated up front letting agents’ fees for tenants.
The announcement that letting agents’ fees will now be the financial responsibility of the landlord, rather than the tenant, is unwelcome news and creates a false economy in our opinion. Not only will it deter investors from entering the buy to let market, leading to a reduction in much needed stock levels, but the tenant will be unlikely to benefit from this ‘saving’ in the long run.
Would-be landlords have already been discouraged from entering the market thanks to the extra 3% stamp duty incurred on buy to let properties and reduced tax allowances, and this is a move which further deters this type of investment. With home ownership still a key issue and unattainable by many, we should be encouraging this type of tenure, not attacking the market further.
Furthermore, this will not be a saving the tenant sees in the long-term. They will eventually incur this additional cost, albeit not upfront, because the landlord will likely increase rents in order to cover this fee.
A more positive move would have been to regulate these fees, ensuring fairness across the board, rather than simply shifting the charge to landlords.
In light of the above and all the recent changes impacting landlords, it is now more important than ever for buy to let investors to seek advice from a specialist broker who understands the current market. In fact, our product of the week is an opportunity for landlords to grow their portfolio by increasing their borrowing on existing assets without impacting adversely on cash flow.
Furthermore, with the government setting out such an ambitious housing plan, it is vital developers of all sizes are encouraged to deliver these homes. Our specialist team of development finance experts can assist with advice about funding anything from a portfolio of a single buy to let property, to a multi-unit residential scheme so do get in touch.