Autumn Statement: Property Round Up
23rd November 2016
Philip Hammond’s Autumn Statement doesn’t contain any real surprises with regard to the property sector given commentary already largely in the media in the run up to today’s announcements.
The introduction of the banning of upfront fees charged by letting agents to tenants whilst on the face of it might seem to benefit tenants is unlikely to achieve this. Letting agents still have to carry out the likes of reference and credit checks and someone will have to bear the cost of these. Ultimately the letting agents have only the tenant or the landlord to bear their costs so if charging the tenant is no longer going to be an option clearly the landlord is going to have to meet these costs either as a one off up-front cost or through increased rent collection charges.
How will landlords react to these extra costs? Well the most likely answer is private landlords will simply look to increase rents so we come full circle with the tenants bearing most if not all of these costs as they have done previously. Yes,landlords have more ability to change agents so to that extent letting agents will potentially have to be more competitive which may have some overall impact on the cost of renting,but to a large degree it smacks of headline grabbing suggesting savings in the rental sector that are illusory rather than real, dressed up as fixing the market economy where it does not work effectively.
The other major headlines for the property sector were in relation to the provision of £1.4bn to deliver 40,000 additional affordable homes and a new £2.3bn fund to deliver infrastructure for 100,000 new homes in areas of high demandwhich will be a shot in the arm for the construction sector. The figures on the face of it sound high but put in the context of the amounts being earmarked for projects such as HS2 at £56bn it seems less impressive given the shortage of housing in the UK.
Following the previously announced stamp duty increases and the phased restriction in mortgage interest relief coupled with the Brexit vote, landlords seem to have initially taken stock but have since continued to make further investments much as before so perhaps we should not be surprised if they continue to have an appetite for the world of property in the face of the latest changes.
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