Dawlish Discussion

George Osborne came out with quite a few things concerning housing in his Autumn Statement on Wednesday, one of which concerned Buy to Let landlords.

Wef April 1st 2016 they will face a 3% stamp duty surcharge on any properties they buy.

My immediate thought when I heard that was - "and I wonder how much of a rush to buy property by BtL landlords will there be between now and 1.4.16 and, if that should be the case, how much might this increase in demand result in an overall increase in house prices?"

Landlords may have to pay the 3% stamp duty, but as the same with any business, in it for profit, it is the customer who will end up paying the price for these increases. As with most things those in power have little understanding of the effects there actions have as long as there is money or votes to be made.

A good indicator of the effect the Stamp Duty surcharge may have on the housing market has been the fluctutaion of the share price of house builders. News of the 3% surcharge effectively halved the increase in share prices that followed earlier announcements on Wednesday about the Government's boost to house building. This would indicate that investors think that the surcharge will have a dampening effect on house prices rises in the medium to long term. 

What will happen between now and 1st April 2016 though is an interesting question. If the property sales market was to behave it did in the summer of 1988, there could be trouble. This of course was the year of Tory Chancellor Nigel Lawson's "boom and bust" budget in which, as well as reducing the upper tax rate down from 60% to 40%, he gave six months notice that he would end double mortgage tax relief for unmarried couples. This notice period sparked a stampede by unmarried couples to buy, ramping up house prices to an unsustainable level. The subsequent downturn saw average prices falling for every year between 1989 and 1993 - and with negative equity haunting the market for many years beyond.

By way of a general disclaimer it would perhaps be prudent to advise here that the value of investments can go down as well as up. If you are buying a house as an investment there have been (and may be in the future) better times to do so. If you are buying a house to become a home however, there is never a better time than the day you find the right property (to buy or to rent) at the right price.

Happy house hunting, all.

Gary Taylor

"If you are buying a house to become a home however, there is never a better time than the day you find the right property (to buy or to rent) at the right price."

Provided you have a big enough deposit and can also get a mortgage?

A problem I know the bigger builders have been working hard to help people overcome. Some may feel such assistance is worth the cost of any 'new home premium' on its own - but if it's a 'fixer-upper' that is sought after, best get saving.

It will be interesting also to see just how effective George Osborne's 'builders' budget' will turn out to be in helping provide the leg-up many would need to become new home owners, shared-equity or otherwise. Futhermore, with wages having fallen behind house price rises nationally and with a growing affordability gap (even before next year's anticipated interest rate rises) is now really the right time to be encouraging FTBs to fly the parental / rental nest and dive into home-ownership? 

Gary Taylor 

“......the government continues to bury its head in the sand over affordability nationwide. Alongside a supply increase it is crucial to ensure a mix of tenures, including low cost rent. In many parts of the country, Starter Homes and mortgages will remain out of reach of those on low incomes and working benefits........”

From: Inside Housing editorial “Owning The Future” 27.11.15

The only way to help those requiring a roof over their heads is to use a large percentage of the smaller new builds as subsidised rental homes. As was the original idea of the council estates.

The problem with the council estates philosphy was that social services never did their job. That being to monitor those renting and make sure they did not stay their for generations. Those that kept their houses with no intention of bettering themselves denied others the chance of a TEMPORARY home.

The big problem is the government will not spend the money and/or shake up the social services to do their job correctly, but will spend billions on other useless projects such as HS2.

So.......we could have an increase in house prices (caused by BtL landlords purchasing before April 2016 deadline.) This would increase costs for those others, non BtL landlords, wishing to buy a home. 

And we could have an increase in market rents caused by BtL landlords passing on the extra stamp duty costs they will incur after the April 2016 deadline to their tenants. This will increase costs for those having no option but to rent a home in the private sector.

Good eh?

BEE9 I have been a good social tenat for many years worked hard and paid my rent, kept the property in good order, never been in arrears, never been in a position to "better myself" and buy, so why is that wrong ???? Surely Social Housing is meant for people like myself so why do you label them temporary homes????? The problem lies with those that did better themselves and excersised their Right to Buy

Not sure what you mean by 'bettering yourself' BEE9?  Do you think a care worker on minimum wage should better themselves rather than look after you in your old age.  Do you think that cleaners should better themselves or anyone else doing a job that perhaps doesn't pay a huge amount but is more worthwhile than some banker or politician?  I know lets price everyone who actually works hard for a living but for the minimum wage out of accommodation.  Job done.  Society sorted.