In recent weeks, the new Chancellor of the Exchequer Rishi Sunak has been drawing up the new budget and many sectors are vying to get a considerable slice of the pie. The property sector is no exception to this and considering that housing was a huge topic in the 2019 general election, it would be no surprise if it becomes one of the main priorities in the budget.
There has also been a lot of speculation around what tax and legislation reforms that landlords can expect in the upcoming budget announcement. The first of which are the stamp duty reforms that will affect a number of landlords from overseas. If this is given the go-ahead by the Treasury, non-UK tax residents will see a surcharge of 3% on top of the 3% levy they already pay on their stamp duty when they purchase a property in England and Northern Ireland as a second home or buy-to-let property. This will have the biggest effect in London where there is the biggest portion of foreign landlords. Many believe that this will have a negative impact on the already diminishing housing supply in the UK.
Neil Cobbold, Chief Sales Officer at the Proptech firm Pay Prop said: “The surcharge was previously mooted at 1% but its increase to 3% will certainly act as a deterrent. Tenants in large English cities could suffer in the long-term if the additional tax burden leads to a fall in overseas investors and subsequently the number of rental properties available.” That aside, it could potentially create a good opportunity for investors who are looking to expand their portfolio - particularly those based in the UK. That aside, it could also create a good opportunity for UK-based landlords as there will be less competition from foreign investors.
There could also be some good news for those that are looking to invest in the North of England. The 2019 general election saw the conservatives take a number of traditional labour seats in the north because the conservatives vowed to put more money into the Northern Powerhouse project once Brexit went ahead and improve the economies and infrastructure in regional towns and cities. The most pressing topic for many will be the controversial HS2 project and how much funding it will receive in the new budget - particularly the second phase, which will be the Northern stretch of the proposed high-speed rail link. Speaking at the New Statesman Northern Powerhouse Conference, the minister for HS2, Andrew Stephenson said that the government are looking to take steps to make a start building the line between the West Midlands and Manchester sooner than originally planned. However, this could delay the rail link between the East Midlands and Leeds. Additionally, pressure groups are also calling for a high-speed rail link between Liverpool and Hull as a northern equivalent to the Crossrail line that is currently in development in London. However, there are no talks of this happening as of yet. In addition to this, the government has also pledged to put more money into housing in Northern regions and provide more funding for local councils to improve opportunities and quality of life in these areas. It will be fair to say, that all eyes will be on Rishi Sunak to see if he can deliver the promises that were made by the conservatives during the election.
Although it isn’t a fiscal issue, there could be some details revealed about the upcoming Renters’ Reform Bill. In November 2016, then-chancellor Phillip Hammond announced some details about the Tenant Fees Bill as part of the Autumn Budget Statement, so there is a possibility that the current chancellor could reveal some details about the Renters’ Reform Bill, including the date of when it’s due to start it’s parliamentary route - details that a lot of landlords are keen to hear.
Regardless of whether the upcoming budget will bring good or bad news for investors, it will be important for investors to pay attention so that they can continue to operate a successful property portfolio.
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