It is unlikely that there will ever be a Budget announcement that doesn’t cause some sort of debate across the UK, and this year has been no different. Last week, a day before the Budget was officially announced, Just Landlords posted an article highlighting some of the topics that we already knew would be covered in George Osborne’s speech; however as we predicted there were some plans that he held close to his chest. Here, we look at some of the most controversial announcements, and how they could affect you as a landlord:
The All-in-One Pension
Due to their traditional policies and sentiments, Conservatives have traditionally been supported by what is called the ‘grey voters’. However, over recent years many older members of the UK public have seen their pensions and savings dwindle due to the Bank of England reducing its interest rate to 0.5 per cent. This measure was put into place by the Bank in order to help the large percentage of the public that would struggle to pay their mortgages during the recession, and this plan was largely successful.
Unfortunately, even though austerity measures helped improve the UK economy, it did lose the Conservatives a considerable amount of older voters. Many people believe this is why George Osborne announced that the government would soon allow retirees to access their pensions all in one go, instead of purchase an annuity which is the current standard. For landlords, this means it is likely they will see more competition over the next few years, as a larger percentage of retirees will invest in buy to let properties and easily be able to afford extra outgoings such as landlord insurance and maintenance fees.
The Next General Election
Usually, Budget announcements only have a marginal effect on the polls, however recent news stories have suggested that the Conservatives gained three points after George Osborne’s Budget announcement. This means that they are now only one point behind the Labour party, who gained only a single point after the Budget announcement. However, the Labour party doesn’t seem overly concerned with the fact that the polls are so tight, and speaking after the Budget announcement shadow business secretary Chuka Umunna said: “We have seen under Ed Miliband’s leadership the Labour party put on over a 1,000 extra councillors, importantly in the marginal seats we need to get a majority at next year’s general election.
“We have put on tens of thousands of new members since May 2010 and, of course, let’s not forget what people were saying in May 2010 – they were writing the party off – people are seriously talking about us actually winning this year and that is not what they were doing in May 2010.” All of this means that the next General Election will be extremely tight, so we expect to see both parties focussing heavily on the UK’s housing crisis which could affect both the property and private rental markets.
The Property Market
Even though it is expected for all political parties’ manifestos to focus heavily on the housing crisis in the run up to the General Election, George Osborne did manage to include some plans for both the property and private rental sectors in his speech. However, it looks as though the Chancellor of the Exchequer is more concerned with improving the property market than the private rental sector, as his main announcement was that the Help to Buy scheme would be extended until the end of the decade. Furthermore, the government aims for two hundred thousand new homes to be built in the near future, however it is not expected for them to be available for buy to let purposes.
Grainia Long, chief executive of the Chartered Institute of Housing (CIH), said that she would have liked to see George Osborne focus more heavily on how the private rental sector can be improved, and added: “For many people living in the market rented sector quality and standards are too often left to chance. Changing the tax system would reward landlords for doing the right thing, whilst not costing the government any additional money.”
The Budget 2014 has brought both pros and cons to those living in the UK, however it seems as though we will have to wait until next year until more radical policies are announced by all parties. This means that as a landlord it is wise to start protecting your business now, as change is most definitely on its way.