The Spring Statement at a glance for landlords

A quick overview of the Chancellor’s statement

Parliament had lots to do yesterday, but everyone took some time out of their other concerns to hear Chancellor of the Exchequer, Philip Hammond, deliver his Spring Statement. In case you were distracted by another piece of parliamentary business, here’s the take-aways for landlords and property investors.

Housing market

The Government’s insistence that it is ‘fixing’ the ‘broken’ housing market got a boost, with the announcement that 50% of house purchases are now made by first time buyers.

Hammond used his speech to praise Help to Buy, as part of this change.

This announcement is the clearest signal that the government’s strategy seems to be working.

Some commentators half-expected an announcement of a tax boost for the buy-to-let market. Again, they were met with silence on this.

House prices

The Office of Budget Responsibility (OBR) now states that average house prices will fall by 0.3%. This is contrary to October 2018’s forecast that the movement would be upwards by 3.2% in 2019.

The OBR points out that the last year’s figures were based on an orderly withdrawal from the European Union. While this remains up in the air, the forecasts will continue to be gloomy.

Making Tax Digital

Almost hidden in the footnotes, Hammond announced that the government’s troubled Making Tax Digital will not be extended to other taxes or businesses in 2020.

Brexit has put the brakes on developing IT systems for income tax and corporation tax.

The roll out had been in the diary for next year but has now been pushed back.

The system, which requires sole-traders and landlords to upload tax returns every quarter, will be pursued with a soft approach. There won’t be penalties for anyone filing late, with revenue and customs saying it will offer help rather than punishment to anyone who is feeling their way through the new system.

The BBC’s Money Box programme has excellent coverage of this, as well as an overview of how the Statement affects person finances.

New housing

While the Chancellor has made clear that all big news will be reserved for the annual budget, he’s pledged financial support for more affordable housing.

The Affordable Homes Guarantee Scheme aims to reduce the cost of borrowing for housing associations. It will see the Government guarantee £3 billion of borrowing to support the creation of 30,000 affordable homes.

If this happens, it will usher in the highest level of house building in the country since the 1970s.

There is also money earmarked for specific building projects in the Southeast.

Greener houses

Fossil fuel heating systems are on their way out. The Future Homes Standard will mean new houses are built to be carbon efficient and to conserve energy.

Property developers will also be required to ensure a higher level of biodiversity in their developments.

Tax

One of the consequences of removing tax relief from landlords was that it might push some landlords into a higher tax band, effectively wiping out any profits from their rented properties.

A small crumb of consolation is that this higher tax threshold will rise to £50,000 in the new tax year.

Read more

https://www.gov.uk/government/news/spring-statement-2019-what-you-need-to-know

https://www.bbc.co.uk/sounds/play/m00035p1

https://economia.icaew.com/news/march-2019/spring-statement-business-sounds-the-foghorn

https://www.ft.com/content/478c1bb0-45a3-11e9-a965-23d669740bfb