Parliament may currently be officially in recess but the real truth of the matter is that the body politic feels like it is currently in the middle of a real fight between two political forces. How you might define those forces is difficult? Is it still Leave versus Remain, or is far more nuanced than this? The Venn diagram of political groups that certain MPs straddle is now very interesting.
Parliament is officially back in session this week and, given the way the ‘new’ Government has started its life under Prime Minister Boris Johnson, you could be forgiven for thinking ‘anything can happen’ over the next couple of months.
News that the Queen is to be asked to suspend Parliament before a Queen’s Speech in October has just filtered through and you get the impression that there is to be an almighty battle, perhaps through the Courts, before this is resolved. These are truly unprecedented times and, while I suspect most of the public will be bemused by these ‘antics’, they could have very deep-seated repercussions for us all.
From a mortgage/housing market perspective, where does this leave us though? Throughout the Summer there were rumours that stamp duty changes were imminent, with some suggestions that this could be changed from a buyer’s tax to a seller’s one. Since then, Chancellor Sajid Javid has apparently put the kibosh on this particular idea, but you can’t help feeling that the stamp duty rumour mill only impedes the market, as potential buyers wait to see whether they might be able to save large amounts of money.
Of course, suggested changes to stamp duty are (currently) just for residential purchases, and there has (unfortunately) not been any rumours around this ‘new’ Government railing back on the extra charges for additional properties that landlords currently have to pay.
More’s the pity, you might add, as it’s clear from recent research carried out by Foundation that landlords themselves believe cuts to the extra 3% they have to pay, or indeed cutting the extra charge entirely, would have a sizeable and positive impact on the property market, and would provide much-needed stimulus to purchase activity.
That’s probably not news to anyone in the sector because, coupled with the taxation changes that landlords have had to face, these are the two biggest obstacles landlords have in terms of ensuring profitability and adding to portfolios. The extra costs can be considerable, and it would not be a surprise to anyone that landlords feel such measures have negatively impacted upon them.
However, while we might anticipate that this Government could make some changes in these areas, we should not be holding our breath. There are clearly bigger fish to fry, and while there have been some positive noises about the importance of the private rental sector to the UK housing market, I’m not sure these will translate into anything concrete. At least, not until the whole Brexit situation is sorted – and how long might we be waiting for that to happen?
Until then, the good news is the quality and competitiveness of the buy-to-let market at the moment. Landlords will not stop refinancing, and they will also not stop purchasing because the opportunities still exist, albeit perhaps utilising a limited company vehicle and/or ensuring that they are adding higher-yielding properties to their portfolio.
This is why advisers should ensure they work with specialist lenders in this area, who understand the opportunities available and have a flexibility of purpose and criteria in order to help landlord clients ensure the ongoing profitability of their buy-to-let portfolio. We certainly recognise the value in terms of a specialist approach and believe, whatever the political outlook, the need for quality lending in the buy-to-let space is assured.
Intervention will always happen, but advisers and lenders can provide the stability required by landlords in these (and any other) circumstances. Support and advice has never been more required – make sure it is you that delivers it and no landlord client feels the need to make an exit from your business.
Jeff Knight is director of marketing at Foundation Home Loans