"The damaging policies aimed at landlords and the buy-to-let sector are clearly having a major impact"
There’s no doubt about it we’re currently living in a state of flux when even those who are supposed to provide confidence and ‘have a plan’ appear to be grasping around in the hope one will drop into their laps.
The best that can be said is that at least the Bank of England appears to know what it’s doing, although how long that might last is anyone’s guess, particularly if there is a far greater degree of political interference brought to bear on that venerable institution. One might even believe that without the steadying hand of the Governor, Mark Carney, we’d be up a certain creek without a paddle.
From a political perspective, the party conferences – specifically the Conservative one – was supposed to give us a much clearer idea of the path the UK is heading down as we motor towards Brexit. Actually, what we saw was a further muddying of the waters – are we going for ‘hard’ Brexit, ‘soft’ Brexit, ‘middling’ Brexit, or as one wag put it, a dog’s Brexit?
At present, the latter appears to be winning the day.
Even amongst themselves, the current Cabinet – particularly those three bastions of British political power, Johnson, Davis and Fox – appear to be more interested in the power struggle rather than the solution. Plus, we have ‘side issues’ like firms being requested to list how many ‘foreign’ workers they have – a ‘policy’ quickly ditched almost as soon as Amber Rudd uttered it. But, you get the sense that this is all policy on the hoof, made up as it goes along with everyone suffering at some point, apart from those with non-UK passports who might be able to jump country’s before a certain substance hits a certain fan.
I’m not a particularly ‘glass half empty’ person but I’d like to see some kind of joined-up thinking when it comes to both Brexit, and specifically the UK housing market. Anyone active in this sector will be aware that the last few months have not been sparkling – certainly from a purchase perspective the word ‘subdued’ seems to have been coined for the last few months.
The damaging policies aimed at landlords and the buy-to-let sector are clearly having a major impact. I know the Government wanted to dampen activity here, what I don’t think they were intending to do was to grab its head, submerge it under the water only to find that it required CPR quick sharpish. It may seem an extreme view but the figures don’t lie – purchase buy-to-let lending was approximately £1bn in August, way down on where it traditionally is, and where it should be. Remortgaging now accounts for two-thirds of all buy-to-let lending activity – what a shift that has been.
And, if the existing course is followed, this is not going to improve anytime soon. Stamp duty increases have hit hard, but then consider tighter underwriting on buy-to-let loans, and add in the tax relief changes to be introduced from April – a less than perfect storm that is unlikely to result in anything but lower and lower activity. At this point, I’m going to add my voice to the groundswell of opinion that is urging Philip Hammond to act in the Autumn Statement – the stamp duty increases should be scrapped, and while he’s at it, take the tax changes as well. When you hear that, according to RICS, we are going to have 1.8m more households looking for private rental property by 2025, your first question is going to be: where’s that supply coming from?
If the individual landlords’ hands continue to be tied by this type of intervention, then I can guarantee we won’t have that supply available, let alone the shortfall for those wanting to own their own homes. To some extent I sympathise slightly with the Government – these measures were not anticipated to be exacerbated by a vote to leave the EU, however that was always a possibility and they have had a more than damaging effect as a result. Given this monumental political shift, the opportunity has to be there to pull back on stamp duty and mortgage interest tax relief – there appears to have been a more supportive tone for landlords to cling on to recently, but we really need to see this backed up by action.
It may not result in the biggest boost ever to activity, but landlords would certainly be much more confident about adding to portfolios and could certainly do their bit to boost the market. And for those who say this would be another kick in the teeth for first-time buyers, I might add that these measures should never have been introduced if they were merely to provide first-timers with a clearer path to ownership. They were never going to do that, and the figures appear to bear this out – it should never have been couched as a landlord versus first-time buyer argument and the sooner we get rid of measures based on this, the better for all concerned