There are other ways of making housing policy work

We are just days away from the 2018 Budget and, even with the ongoing Brexit negotiations dominating the news agenda, there has already been some fevered speculation on what measures might be announced by Chancellor, Philip Hammond, on the 29th.

Landlords are probably waiting for the Budget with something akin to nervous anticipation – earlier in the summer there were rumours the Treasury were looking at more landlord-bashing measures, with potentially extra stamp duty charges to be levied on them, on top of the 3% extra they already pay to purchase ‘additional properties’.

Now, we hear there might be CGT incentives for landlords who sell their properties to existing tenants – however (rather importantly) the tenant must have lived in the property for three years and the landlord has to want to sell. We are not yet at a point where landlords are being compelled to sell, however watching some of the Labour Party Conference I can’t help feeling that if Jeremy Corbyn ever makes it to Number 10, then this type of policy might make it on to the Statute books.

Even if Philip Hammond does offer this ‘landlord incentive’ regarding CGT then we still can’t actually say that the Government are supporting landlords or encouraging further investment. Indeed, this seems to want to expedite the move of more ‘amateur landlords’ out of the private rental sector (PRS), with the Government’s unstated aim of moving more ‘inventory’ from the PRS to owner-occupation again being behind such measures.

In that context, the recent figures from Hamptons International suggesting landlords have spent billions less on purchasing investment properties over the last three years, is not surprising at all. Apparently, in the first half of 2018, buy-to-let investors spent £12.1 billion; compare that to the £17.3 billion they spent in 2015. In terms of property numbers that is 64,255 in the first six months of this year, compared to 92,994 in the corresponding half of 2015. A significant drop and one that George Osborne might be proud of, but few would suggest is doing much for the supply of overall properties needed in the PRS.

Clearly, when the sector approaches a Budget there will be a large part of its ‘wish list’ focused on trying to get the Government to row back on the policies that have had such an impact on buy-to-let investment. That means, lobbying on an extra charge stamp duty u-turn and perhaps hoping Hammond entertains the idea of reinstating full mortgage interest tax relief.

We might think we’re are whistling in the wind when it comes to securing such change – and for what it’s worth, I suspect this Chancellor is not for turning on these measures – but we don’t have to look too far to see that the ‘dream’ of such landlord-supporting policies can be turned into reality.

The Republic of Ireland Budget – held at the start of October – brought forward a decision to restore 100% mortgage interest relief for landlords who purchase, improve or repair a residential property. Indeed, the housing-supporting Budget – while not gaining full support across the board – was an attempt to breathe further life into Ireland’s PRS and to give landlords some incentives to add to portfolios and bridge that supply gap.

Whether the UK Government is willing to go even some way to doing the same seems like a flight of fancy at present, but the decision in Ireland does go to show that there are other ways of making housing policy work. One of them has to be a recognition that the measures have undoubtedly diluted the UK PRS and that some form of change can help achieve wider goals, particularly when it comes to the supply of quality rental properties which, after all, are still very much needed by many of the population.

Philip Hammond will perhaps not wish to look across the Irish Sea for housing market solutions – especially at this time – but if he does, he might just well find an option that can help an important stakeholder – landlords – that unfortunately has been blamed for the wider market’s failings for far too long.

Bob Young is CEO of Fleet Mortgages

Exit mobile version