LETTING & ESTATE AGENT

The Chancellor's Autumn Budget - Does it Help Cornwall?

The Chancellor's Autumn Budget - Does it Help Cornwall?
The Autumn Budget wasn't expected to throw up too many surprises in terms of housing . they were reserved for the summer budget, and the proposals which led many landlords to question whether they would even be profitable by 2020.

However, all followers of the industry market were shocked to hear of a new 3% surcharge on second homes for buy-to-let investors, due to be enforced in April 2016. The bulk of media attention has focused on this change, but here is a quick reminder of what else came out in the budget.

The Chancellor claimed that sorting the housing crisis was a big priority of his. Announcements included:

New Homes
• George Osborne wants 400,000 affordable houses to become available by the end of the current government in 2020.
• He will specifically target starter homes for first time buyers, therefore starting the property chain nationwide.
• The starter home fund will be £2.3bn of a total £9.6bn investment in housing initiatives.
Help to Buy Shared Ownership Scheme
• 135,000 homes will be made available for part-ownership. In practice, this means low earning
households (£80,000pa or less) will be eligible to buy a share of a house from a housing association
or local council, then gradually increase their share over time until they own the property outright.
• In the time where the household has an incomplete stake in the property, rent will be limited to 3% of the value of the house that has not been paid for by the household.
• For example. A house is worth £250,000. The household has gradually upped their ownership of the property to 50%. They are therefore paying 3% rent on the remaining £125,000, which is £312pcm.
However, it is worth noting that house prices are rising so an increase in price will result in an increase in rent. Also, households that sell up before reaching full ownership will be unlikely to receive the market value of the property.

Other benefits

The government is making a concerted effort to bridge the North-South divide. The South East and London always skews the figures as wages and rents in Cornwall and the South West can never reach the same levels meaning yields are lower. 
Many accidental landlords are likely to leave the industry to avoid the gradually increasing tax relief changes, and they will be replaced by professional landlords. This means that the pool of landlords will become smaller, and I expect a slight calming of buy-to-let property prices.