Effects of Autumn Budget Statement 2023 on UK Property Investors
It’s been a tough year for the property sector. Thankfully there were certain measures in the Autumn Budget Statement, announced recently, to swell the heart of property investors. But there were many omissions to moan about too.
One of the biggest boosts to developers was the consultation into permitted development rights which could make it possible to divide one house into two flats. The only stipulation being that the exterior of the property doesn’t change. This could mean big profits for those investors prepared to get their hands dirty and do the development work themselves.
Private rental sector still hugely relevant
The huge demand for private rental properties will continue too, thanks to the chancellor doing nothing to cut Stamp Duty. This fact and the current high mortgage rates make it impossible for many couples to buy their own home.
Jonathan Stinton, Head of Intermediary Relationships at the Coventry Building Society, pointed out that failing to do anything about Stamp Duty changes could result in homebuyers having to fork out an additional £2,500 on an average priced home by March 2025.
Mortgage guarantee scheme extension
First time buyers and current home owners though were thrown a lifeline in the form of an 18-month extension to the Mortgage Guarantee Scheme. This allows them to buy property worth £600,000 with just a five per cent mortgage. And that property doesn’t have to be a New Build.
Having said that, not all mortgage companies were impressed.
Rachael Sinclair, Director of Mortgages and Financial Wellbeing at Nationwide Building Society said she was disappointed that the scheme continues to restrict qualifying loans to 4.5 times income. “Research shows that most homes remain unaffordable through the scheme,” she added.
A plus for property investors is they can now feel more reassured when renting to individuals and couples in receipt of Local Housing Allowance (LHA). That’s because, in the Budget, the Chancellor announced a £1 billion investment into the sector, designed to cover market rents for the bottom 30 per cent.
Cut in self-employed landlord NI
Self-employed landlords – along with much of the population – will benefit from the abolishment of class 2 national insurance. That’s to the tune of £192 per year. Class 4 national insurance is to be cut from nine per cent to eight per cent on profits between £12,570 and £50,270, resulting in a saving of around £350 a year.
One of the big omissions in the budget according to Maria Harris, Chair of the Open Property Data Association (OPDA), was Jeremy Hunt’s failure to implement any real measures to speed up the way homes are bought and sold in the UK today. He ordered just £3 million for pilots to look at proptech development and digitising local council property stats – which compared unfavourably to the £500 million for developing Artificial Intelligence.
Harris added: “The Chancellor stated that the UK’s tech sector has grown to become the third largest in the world, this needs to filter through urgently into the tech and digitisation of the home buying and selling process where all key data is held centrally and can be accessed easily and quickly by every relevant party.”
It currently takes an average of 19 weeks to buy and sell in the UK – that’s 77 per cent longer than back in 2007 according to data from The Landmark Information Group.
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