For the past few days there have been a number of rumours concerning George Osborne’s spending review with many people concerned that the Chancellor would cut even more public spending. Now the wait is over as the Chancellor of the Exchequer has announced the government’s spending plans for the rest of the year and discussed how the Budget has been faring so far. So here we look at how the changes in government spending will affect landlords so that you can prepare your business in the future:
Increased Spending on Housing
For the past few months we have seen numerous news stories where politicians have discussed their plans to alleviate the housing crisis, however now things seem to have come to fruition. In the next few months the government will be investing three billion pounds so that construction can begin on 165,000 new affordable homes. However, it has not been made clear yet whether these new properties will be available for private individuals only or if they could be used as private rented accommodations. Even though the government is trying to get more people on the property ladder it is hoped that they will also create more private rented accommodation in order to reduce the demand on both markets.
As a landlord you are probably wondering why you need to know about Mr Osborne’s plans for improving transport in the UK, however if the transport services improve in the area where your properties are based then they could improve in value. One of the biggest investments includes thirty billion pounds to electrify over eight hundred and fifty miles of train lines across the country, meaning that if your tenants need to commute they may soon find it much easier. The government are also planning on going ahead with their controversial High Speed Rail 2 scheme and investing fifty billion pounds in a direct rail route between London and Birmingham. Even though MPs have already criticised this decision, it could help landlords expand their property portfolios across the country and will hopefully spread out the demand for housing across the UK.
Upgrading the UK
A few weeks ago it was announced that a number of people who own properties in Northern Wales will soon struggle to afford home or landlord insurance due to the fact that the area is now extremely prone to flooding. This is why the government has decided to invest three hundred and seventy million pounds in flood defences across the UK, so that homes can be protected the coastline be kept under control. Furthermore, the government has put aside two hundred and fifty million pounds for installing super-fast broadband in rural areas, which means that the quality of many landlords’ housing may soon improve.
Naturally, the Spending Review doesn’t contain all good news, and it has been announced that the government is cutting spending in a number of areas in order to reduce the deficit and improve the UK’s economy. One of the cuts includes not giving expatriate British pensioners their winter fuel allowance if they live in warmer countries including Cyprus, France, Gibraltar, Greece, Malta, Portugal and Spain. Landlords who let out properties in any of these countries need to be aware of this fact as it means that their tenants will have higher utility bills as of autumn 2015. Benefits are also taking another hit as George Osborne has announced that there will be a cap on the amount of government spending on welfare which will come into effect as of April 2015. This decision means that those that currently rely on benefits will see the amount they receive decrease, and as we have already seen from the current welfare reforms this can lead to the amount tenants in rent arrears to increase at a rapid rate.
As the Spending Review has only just been announced it’s too soon to worry about some of Mr Osborne’s plans, and if they are criticised to a large extent we could see them being reconsidered in the future. However, it is still important for landlords to know what changes to expect in the next few years and to start thinking how they need to adapt their businesses in order to thrive in the future.