Landlords seeing the Autumn Statement as a missed opportunity

Yesterday saw the controversial, packed and as it turns out, final Autumn Statement delivered by Chancellor Philip Hammond.

During his address, Mr Hammond outlined plans to ban letting agent fees in the very near future. This has understandably left many landlords upset, with them now left to fit the bill for these charges.

Missed Opportunity

In fact, many buy-to-let landlords have been left disappointed, considering the Statement as a missed opportunity, to back those investing in the sector. Failure to alter stamp duty rates, or abolish proposed changes to mortgage interest tax relief have been highlighted as two missed chances.

Stamp Duty reforms announced by previous Chancellor George Osborne have moved to slow the housing market and has only raised half as much money as the Treasury forecasted.

The Exchequer has received £370m less in Stamp Duty than the £700m it expected, analysis has revealed.

Figures compiled by the Council of Mortgage Lenders indicate that the total amount borrowed by buy-to-let landlords slipped on an annual basis. The total dropped by 22% year-on-year to £2.8bn in September, with loans also down by 6% to 18,200. This shows a decline of 26% on the same period in 2015.

Anthony Hesse, managing director at Property Personnel, said: ‘Slashing the rate of stamp duty would have been Philip Hammond’s single most effective fix for UK finances. There is no more economically stimulating activity than house sales and purchases-so it would have been a tax cut that would largely have paid for itself. As a result, the continued stifling of the market is a missed opportunity for both the estate agency sector and the country.’[1]

Tax alterations

According to the National Landlords Association, 440,000 basic-rate tax payers will be driven into a higher tax bracket from April 2017. This is due to changes to mortgage interest tax relief, which will restrict the amount of mortgage interest landlords can offset against tax.

By April 2020, when the measures have been fully withdrawn, it is feared that higher-rate tax payers will only get 50% of their current relief. The worry is that these additional charges will be passed down to tenants.

Richard Lambert, chief executive officer at the National Landlords Association, observed: ‘This policy will push 44% of basic rate tax-paying landlords into a higher bracket, forcing them to either sell up and end perfectly happy tenancies, or increase rents.’[2]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/autumn-statement-missed-opportunity-to-support-buy-to-let-landlords