Summer Budget 2015 – Landlords Reactions

Martin Bellinger, chief operating officer at developer Essential Living, said: “Housing needs to be less of a political football and more about coherent long-term policies that deal with the actual issues. We’re not building enough homes because State-funded construction isn’t happening. House builders aren’t about to double their output and the hundreds of smaller developers we once had were largely killed off by the last recession.

“Starter Homes are all very well intentioned, but anyone on the ground knows that even with a 25 percent discount, buying a house for many still won’t be affordable and, even if it were, the chances are these won’t be the sorts of places we want to live. Similarly, grants for shared ownership are more tinkering around the edges.

“As a brand set up to build homes specifically for rent, we’re funded by long-term institutional money. So we take a 20-year view not a two year view as a listed housebuilder might. We’ve heard the Bank of England warn over the dangers of Britain’s debt mountain and encouraging people to buy who may not be best placed to is misjudged.

“Above all though, institutional finance is a major new source of capital which could create a huge additional supply of housing. Building for rent relieves pressure from the ownership sector and will help raise standards across the market by replacing rogue landlords and amateur investor with companies whose sole purpose is to provide housing as a service.

“For consumers, it means homes fit for purpose, economies of scale offering higher standards of living and all manner of shared spaces which mean renters can commune with their neighbours in top-floor lounges, or have a BBQ on the roof. It works like this in the US where the multifamily sector is worth trilions of dollars. Replicating this in the UK would greatly enhance the housing market for everyone.”

“Councils could land a windfall by selling off assets and pocketing the cash. But smarter local authorities could set up partnerships with developers, building homes for rent which could provide an ongoing income stream to help fund services over the long term – rather than simply an up-front cash sum.”

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http://www.housingexcellence.co.uk/news/autumnstatement-industry-reaction-comes-thick-and-fast

Of course he's not trying to 'kill' the sector. But he knows how much juice comes out when you squeeze a lemon. Same goes for the second homes market. It wouldn't surprise me if he squeezed a little harder by, say, adding a premium to council tax. He may even allow Councils to retain this money to finance 'affordable 'housing.

Of course the more he attacks landlords the more he attacks tenants. Landlords will pass the costs on or simply sell up. Result = less property to rent = higher rents.
Why doesn't he face up to the fact that rents are rising due due to massive increase in demand due to mass immigration, instead of venting his anger on landlords.
I rent out places in Southampton.
12 years ago 10% of applicants were from abroad. Now it's more like 70% are ever since Gordon 'British jobs & homes for Polish workers' Brown opened the floodgates in 2004.
Vote OUT of EU

http://www.independent.co.uk/news/business/news/autumn-statement-class-war-5-charts-students-women-and-the-poor-will-pay-for-osbornes-policies-a6749541.html

http://www.mortgagesolutions.co.uk/news/2015-11-25-buy-to-let-market-not-in-the-chancellors-good-books/

David Smith writes in the Sunday Times today and has recognised that the effects of GO tax changes will increase rents. Unfortunately he doesn't put in very strong terms, and give any indications of high much rents may rise.

■ I have been thinking of buy-to-let landlords in recent days, and the only thing that comes to mind is Kenneth Williams, and his immortal line: “Infamy! Infamy! They’ve all got it in for me!” George Osborne’s attack on buy-to-let in his summer budget — reducing mortgage-interest relief and wear-and-tear allowances — was tough. His announcements in the autumn statement bordered on the vindictive.

This year’s measures will almost certainly result in higher rents for tenants, who are already struggling with sky-high housing costs. Remember, too, that the Bank of England has warned about the vulnerability of the property market to a sell-off by buy-to-let landlords. If that happens, the Bank will know who to blame.

Full article can be read here: http://www.thesundaytimes.co.uk/sto/style/homes_and_gardens/Move/article1637926.ece

He says: “Put together, the recent measures aimed at buy-to-let make it a very challenging market and if the Government doesn’t want the sector to exist – or exist as big as it is now – then they will keep introducing measures. Will buy-to-let lending fall next year? It’s possible.

Landlords writing on online landlord community Property Tribes say the changes will “send a tsunami” through the buy-to-let sector.

The portal’s co-founder, Vanessa Warwick, says: “This is another blow for landlords, following the Summer Budget 2015 tax changes. There is a clear agenda by the Government to stifle small landlords investing in the private rented sector.

“Landlords are supported by many other businesses such as lettings agents, mortgage brokers, builders, and suppliers of landlord-related products and services, and these too will be affected as the PRS will stagnate or even start to shrink.

“Ultimately though, it will be tenants who bear the brunt as choice of rental property decreases and rents rise as a result. The ripples will be felt throughout the property sector and the Conservatives have ensured that they have lost the landlord vote.”

http://www.mortgagestrategy.co.uk/has-the-chancellor-driven-amateur-landlords-out-of-the-market/

Financial planning expert Rachael Griffin at Old Mutual said the Government expects to pocket £880 million a year from the measure by 2021.

“Many landlords are already concerned that the margins on buy-to-let investments are being squeezed and for some this may be the final nail in the coffin."

Karen Bennett at adviser service Unbiased.co.uk said the stamp duty surcharge may be the last straw for some landlords.

“The Chancellor said he wanted to deter the buying-up of property by the super-wealthy living overseas, but that isn't who will suffer from this measure - it's the lower-end of the market who may be forced out of it, leaving more property for the super-rich to snap up.

“Some landlords are already finding that on their existing mortgage deals they will now make a loss, not a profit.

“As for how landlords can bounce back from this, the options are pretty limited.”

Would three-quarters vote for them now!

“Small landlords may feel let down, however. Survey figures have shown that three-quarters of them voted for the current Government and today’s announcement, coming off the back of the changes to mortgage interest relief, creates a very negative climate towards the small investor. As SDLT tends to be figured into the purchase price of homes, we could also find that the change is harmful to homeowners trying to move up the housing ladder, as prospective investors will be fewer in number and will seek to pay less.”

Article in the Telegraph about lenders lobbying Bank of England on BTL mortgages

http://www.telegraph.co.uk/finance/bank-of-england/12021828/Lenders-lobby-Bank-of-England-to-leave-buy-to-let-alone.html

Let’s be clear; the shifting sand of stamp duty has created a spectre of policy uncertainty that makes investors nervous. Over the past year, there were over 110,000 buy to let transactions. A proportion of this market may pare back next year as a direct result of this change, but with closer to 1.2 million housing transactions across the UK, price impacts will be almost zero overall.

Our biggest concern is in the new build space, where scheme viability often depends on off-plan sales. This is investor territory as owner-occupiers want to touch and feel their future home, meaning that a weaker demand from investors will actually weaken overall supply in London as viability is reduced and construction finance is held back.

This is in direct contradiction to the government’s drive to improve housing supply; the UK desperately needs long-term planning rather than short-term ideas if it ever going to solve the housing crisis.

The outcome of the stamp duty change will have very few winners

and some clear losers from both renters and landlords. A rethink may be wishful thinking, but is certainly warranted here.

http://www.cityam.com/229744/after-the-chancellors-autumn-statement-stamp-duty-hike-what-should-landlords-and-buy-to-let-investors-do-now