Alok Shama has been appointed Housing Minister and the big question is “will he make a difference”
As published figures show activity in the hosing and rental market slowed in the first quarter of 2017, most markedly in London. Some informed sources feel uncertainty over the General Election, Brexit and the Feds recent rise in US interest rates has caused the mortgage & bridging markets to cool and this has resulted in a reduction in consumer confidence which translates to inertia.
However, other leading industry sources feel that the significant slowdown is as of a direct result of the recent increases in Stamp Duty (Stamp Duty Land Tax – SDLT) for owners of two or more properties, coupled with the implementation of tax changes to tax relief on interest paid on investment / Buy To Let mortgages.
Certainly, whatever your opinion, it would appear we are entering or are already in, a period when transactions will continue to slow, investment / Buy To Let owners are less likely to make further acquisitions or even exit the sector and those with one property in the background remain “property locked” as a result of the significant SDLT implication should they move home.
What does the market say….
Listening to leading industry figures at a recent Bridging Introducer Round Table meeting it’s clear the majority hope Mr Shama recognises the situation and helps make some changes to ease the burden of SDLT for so many who simply wish to move home but cannot afford to do so, have a Buy To Let property and would like to make further investments or those wishing to commute their property to Limited Company ownership.
For many the buy to let property is their only form of investment and these small investors collectively stimulates the mortgage, bridging & finance market; which after all is responsible for the employment of over 2 million people in the UK, without consideration of the wider implications of the Construction Industry.
Mel Fordham, CEO at Centrado said, “We have experienced the extremes of market conditions, expressly in the late 90’s and most recently when the Financial Markets collapsed in 2007”
“Its not unusual to see transaction reduce following a significant regulatory, legislative or tax change which is normally the catalyst for feverish activity and rapid buying. Obviously, the introduction of increased SDLT saw many buyers rushing to complete purchases before the deadline of the introduction and indicatively this results in almost a void post the deadline.”
So, will Mr Shama, who, in fairness, has been an advocate of some recent changes in the establishment, grasp the nettle and recognise what the wider financial implications on the UK economy could be if he fails to recognise the challenges Mortgage Industry? I guess time only will tell!
However, as with every change opportunity is generated, so if you are looking to bag a property bargain, you may find the changes are to your very much to your advantage!!!