On Wednesday 22 November, chancellor Philip Hammond will take centre-stage in the House of Commons to deliver his first ever Autumn Budget. So far, 2017 has been full of changes for the UK buy-to-let sector, so it will be no surprise if he has a few more tricks up his sleeve on Budget day.
The Housing White Paper was a promising start to the year, although the government is yet to deliver on any of the promises made. The 22 November will be a chance for the chancellor to reassure the industry on these plans and, I hope, address some further urgent matters.
I have outlined the following five things that I would like to be included in the upcoming Budget for buy-to-let and the broader economy, as a whole:
1. Reduction in Stamp Duty
More than just the buy-to-let sector, Stamp Duty should be reduced across the board as it is having a significant impact on property prices, effecting the ability of aspiring homeowners to buy and older homeowners to sell and downsize. Since the higher rates were enforced, the number of property transactions, particularly in London and the South-East, have plummeted.
Far from encouraging an efficient market, Stamp Duty unfairly targets certain parts of the country, such as London, where property prices frequently surpass the £925,000 and £1.5m mark. As a result, homeowners here are taxed at 10% and the highest rate of 12%, respectively. A reduction in the level of a high transaction tax, such as Stamp Duty, will increase activity in the house-purchase market and benefit the broader economy.
2. Period of calm for buy to let
Recently, there have been many changes in the buy-to-let sector. From the new portfolio landlord guidelines, which are about to come into effect at the beginning of October, to government changes, it is about time the industry is allowed the time it needs to understand how these changes will play out over the next couple of months. A property is a long-term purchase, usually made after lengthy consideration, so landlords should be given time to comprehend the longer-term effects of these changes before they make the decision to get involved.
3. Support for smaller housing developers
There is a critical housing shortage in the UK and to improve this situation the government should do more to make it easier for smaller housing developers to do their job. For example, by making planning permission easier to obtain and ensuring that fewer potential housing sites are land-banked, we can encourage the rise of more new-builds. There also needs to be a greater focus on the areas where rental and house price growth is reaching particularly unsustainable levels. The Landbay Rental Index has shown that rents in the East of England are growing faster than any other region, so this should, perhaps, be the priority for the government.
4. Stronger commitment to cutting Corporation Tax
The government has promised that Corporation Tax levels will decrease to 17% by 2020, but there needs to be a stronger push to demonstrate their commitment to this promise. Further cuts would be the best way to show companies that Britain is supportive of enterprise and open for business post-Brexit.
5. Drop in payroll taxes
Rather than taxing employers for creating new jobs, surely we should be incentivising the process? As with the commitment to cutting corporation tax, a drop in payroll taxes would highlight government support of business and enterprise. It would especially help smaller businesses that often have to battle with the balance of growing their team with limited financial resources.