It’s probably about time that landlords and buy-to-let investors got a little bit of good news given that the previous few years have been almost a procession of new announcements for new taxes, charges or changes to the law for property investors.
Whether it be tax laws, the laws surrounding agents fees or tax relief, the environment for buy-to-let has become more difficult over the years, even if that has brought opportunities with it as well, with a more professional approach to the market.
With the pandemic now beginning to ease and lockdown being lifted all eyes turned to the, still fairly new, chancellor, Rishi Sunak, he made his first summer statement, which had been leading most of the previous day’s news headlines and announcements.
There was an expectation of big announcements, expensive plans and big implications. As with anything there were expected winners and losers, and those in property were hoping for a little meat on the bones to allow them to build on the momentum that has been created since the lockdown measures on the market were lifted in late May.
Nobody can accuse Sunak of lacking ambition, with a statement that is set to cost billions in the long run, but with borrowing costs at historical lows, many have persuasively argued that now is the time to borrow on a large scale to tackle a large problem.
The economy has taken a shock, and many expect it to be a quicker recovery than first thought, but that doesn’t stop the fact that action was required to save jobs and businesses in certain industries, and the chancellor appears to have delivered.
Stamp Duty Cuts
The most eye-catching announcement made last week was that the threshold for stamp duty on residential property in England and Northern Ireland will rise from £125,000 to £500,000, which is intended to last through to March 2021.
Whilst the measure is impressive and will certainly stimulate the housing market whilst protecting prices, there are also other implications for second homeowners and landlords.
Because it includes all residential property sales, buy-to-let landlords and people buying second homes will also benefit from the tax cut. The Mirror reported that ‘Mr Sunak said the £3.8bn temporary change, to March 31, 2021, will take almost nine in ten buyers out of the tax and stimulate the housing market. It will save the average buyer £4,500, rising to a maximum of £15,000 for homes over £500,000.’
2021 and beyond
With estate agents and property sellers reporting record activity and demand since re-opening, it’s welcome to have the government give a vote of confidence to the property industry whilst providing some tax relief to landlords and investors.
With renters predicted to rise in proportion even further over the next five years, it must be recognised that housing will continue to be an issue, and whilst the government struggles to fulfil that demand with house building, rental property will still be required.
This gives the opportunity for the market to pick up where it left off before the pandemic and continue that success through to next year.
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