The UK’s Chancellor of the Exchequer, Philip Hammond, in his first Autumn Statement, has highlighted housing as one of the Government’s main areas cited as “critical for improving productivity”. Close to £7 billion is planned to be invested into the housing sector, which includes £1.4bn aimed at delivering 40,000 new affordable homes, £2.3 billion for a new housing infrastructure fund providing a boost to private house building and £1.7 billion for house building on public sector land in collaboration with private sector developers.
In a clear acknowledgment of the UK’s dire shortage of property Mr. Hammond stated that “Building more homes is central to this Government’s vision of a country that works for everyone.”
Melanie Leech, chief executive of the British Property Federation, welcomed the news saying, “This Budget’s hidden gem is the spending on infrastructure to help bring forward housing sites. Infrastructure spending is housing delivery’s silver bullet and the considerable commitment to invest about £2bn a year is therefore very welcome.“
The other property related announcement was regarding the widely expected ban on upfront fees charged by letting agents in England. The Chancellor said shifting the cost to landlords will save 4.3 million households hundreds of pounds. The move could spur competition as landlords, unlike tenants, can shop around for the cheapest agent. However, although indeed tenants will save money on upfront costs which will potentially increase rental demand somewhat, as tenants who previously had delayed a move or made a decision to not leave a house share or parents’ home, ultimately the costs of the landlord bearing the fees will be passed on in higher rents. The affect overall will be quite neutral but only likely to increase rentals and demand further. We do not see any negative impact for our investors in this regard.
Other main points which we see as key for our investor’s in Liverpool, Manchester, Bradford and Leeds is the Chancellor reiterated the Government’s support for the Northern Powerhouse, publishing a dedicated strategy paper reiterating many of George Osborne’s previous announcements along with some new measures such as and borrowing powers for new metro mayors in Liverpool and Manchester.
Richard Corby, director of Lambert Smith Hampton was very positive with this news: “Are we in the North getting more than crumbs from the table of central government for once? It is great to see £556m directed to the LEPs in the North and for the Northern Powerhouse to get some honourable mentions about increasing productivity and improving infrastructure”.
The Office for Budget Responsibility’s growth forecasts showed stable and consistent predications of close to 2% over the 6 years which was based on more pessimistic views when taking in the Brexit scenario. These growth are not too different from previous years and the main point here is that on a conservative projection there is no doom and gloom resulting from the Brexit as we reported on June 24th.
We would have liked to see some reform of the Stamp Duty changes announced earlier this year which were seen by many as negative but this was a fairly low key Autumn Statement and after the shocks and news of 2016 some stability is always welcome, especially for investors!
In conclusion, the need to make the rental sector more affordable in addition to boosting house building, are ultimately positive for UK property investors.
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