A couple of months ago, I spoke to a close acquaintance about the upcoming Budget.
They were utterly convinced the Chancellor would “have to” do something on Stamp Duty, incentives for first-time buyers, and a potential Help to Buy replacement, in order to try and bring back some of this voting demographic to the Conservative Party fold.
Not only that, they also mentioned that “Jeremy Hunt is a landlord” and there was the suggestion that someone who would have been acutely aware of how landlords have been impacted by Stamp Duty, extra charges and the pulling of mortgage interest tax relief, might therefore look sympathetically on buy-to-let/property investment, perhaps even cutting the 3% charge, certainly including landlords in any Stamp Duty changes, but perhaps not going so far as to U-turn on tax relief.
Now, to give this person their dues, there was a lot of noise being made on housing and property market measures in the early weeks of January.
Michael Gove, for example, was trawling the TV studios talking about all manner of measures, including stamp duty changes, and there were even some rumors the Government would go all out and abolish it entirely.
However, as February progressed and certainly as we saw the UK slipping into recession, it became increasingly apparent that big ticket measures designed to stimulate the housing market were not just being put on the back burner but dumped into the bin in a burnt mess.
Hence, we come right up to date, and we have to confront the recent Budget.
In a sense, looking at the measures announced, we can definitely hark back to the “Jeremy Hunt is a landlord” comment, but we might surmise that Hunt is coming to the end of his own landlord journey, isn’t too interested in either improving their lot, or increasing the supply of properties in the private rental sector (PRS), and it seems he now also subscribes to the view that you have to engage in policies which effectively pit landlords against first-time buyers and owner-occupiers.
How else can you explain the decision to cut the higher rate of CGT from 28% to 24% on the sale of residential property?
The Government even spell this out in the ‘Red Book’ – this policy is designed to incentivize landlords and additional homeowners to sell up, and it is hoped by doing so, they increase transaction numbers and tax take, and these properties are bought by first-timers.
So, instead of seeing the owner-occupied space and the PRS as two sides of the same coin, which need to be treated equally in order to get a fully-functioning housing market, what we have is a continuation of all those policies designed to improve housing supply to purchasers by effectively moving landlords into an economic position where they feel they have to sell up.
Now, recent history will tell us, that this works to a certain extent, and we’ve certainly seen landlords with perhaps one or two properties leaving the PRS, but can we truly say these properties have made their way to first-time buyers?
After all, the most coveted property for a first-timer is a new-build – landlords are not selling new-builds to first-timers, of that there is no doubt.
Professional and portfolio landlords who might wish to purchase multiple properties have been disincentivized further with the abolishment of multiple dwellings relief on stamp duty, while those who might have been trying to up their yield by moving their properties from longer tenancies to holiday lets have also seen the furnished holiday lettings tax regime abolished.
This is designed to move holiday lets back to long-term tenants but whether it actually achieves this aim, remains to be seen.
The maths of each property is still going to determine whether landlords continue renting out these properties as holiday lets – perhaps the Government also believes there is a greater likelihood these will be sold onto first-timer buyers?
So, understandably, this can hardly be said to be a positive Budget for landlords or the PRS, or indeed the wider housing market at all.
Instead of tackling the root cause of the UK’s housing market problems – namely a lack of supply for both owner-occupation and the PRS – the Government have effectively continued a policy which hopes that landlords exit the market, and when they sell up, these properties are bought by first-time buyers or others.
It will not take a genius to work out where such a policy has left us right now, and therefore to ‘double down’ on it seems somewhat baffling and not least a little galling for those working in this sector and trying to find ways to improve the lots of both tenants – 4.6 million households rent privately in the UK – and those who would also like to buy their own home.
Both tend to be one and the same, and the sooner we have politicians who treat them as such, the more likely we are to have housing policy that works for both.
Steve Cox is chief commercial officer at Fleet Mortgages