Demand continues to significantly outrun supply in the buy to let market. Many more people are seeking short term accommodation than the market can possibly supply. At a time when the economy is struggling and supplying new privately owned property offering an opportunity not just to provide growth in that sector but to assist with issues as broad as labour mobility (both for those looking to come to Britain to work and those within Britain finding themselves unable to work in their home town or city) it is surprising to see no real support for the sector offered by the chancellor in the budget.
Not only is there not enough private rented accommodation available, but it is often of an insufficient standard to provide a satisfactory long term solution to Britain’s housing problems. This is despite profits continuing to increase in the sector due to the extreme difficulty in finding private rented accommodation driving competition between tenants for the few buy to let mortgaged properties available on the market through the roof.
One of the obvious solutions is to take measures to encourage landlords to invest more money in either growing their portfolios or extending and renovating their existing stock through significant tax breaks, lending schemes and other local incentives. Everything from green initiatives funding better insulation, windows to refurbishment grants would not only benefit tenants but would improve the economy, availability of housing stock and provide long term benefits to the landlords. In this tough economy it’s important to stoke what few fires we have and encourage some of that profit and spending to spill over into growth in other affiliated sectors as well as provide more opportunity for landlords to improve their portfolio (quality or number) and profit more in the long term.
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First Time Buyer Initiatives Offer No Solutions
The government has pressed ahead with a number of first time buyer initiatives aimed at improving the housing market and taking some strain away from the private rented sector. A huge move in this direction would have done something to dampen the buy to let sector and reduced competition. However, the current schemes have only impacted a very small number of borrowers – only a few thousand properties were ever shifted under the ‘first buy’ scheme for example. Britain doesn’t need a few thousand additional properties, she needs huge investment not only in the quality of the existing stock but in the addition of more units.
Stamp Duty Changes
There were no significant stamp duty changes as far as buy to let landlords were concerned. The super rich were hit with an increase to 7%, but as this will only apply to individual transactions and not portfolios it will not really step into the buy to let mortgage arena at all as few properties valued over £2m are rented out in any event. There was almost certainly an opportunity here for the government to offer improved stamp duty terms to landlords spending over a certain amount on refurbishment in the fist year of owning a property. This would greatly encourage the much needed improvement in housing stock and allow landlords to benefit from higher rents in a tax efficient manner – a real win/win situation for the nation, tenant and landlord.