Housing market ignored by Chancellor

Over the last few years we have seen major tax increases for buy to let investors and new tax levies on second home ownership. Today’s budget by Philip Hammond, the Chancellor of the Exchequer, was a relatively drab affair if you were expecting any bells and whistles in the property sector/housing market. There was some encouraging news with regards to the UK economy, lower-than-expected borrowings, and hopes for the future, but not much help for first-time buyers.

Housing market

There were only really three housing market-related issues announced with the autumn budget:

• An extension of stamp duty exemption to cover all housing shared equity purchases with a value to £500,000
• An additional £500 million for the Housing Infrastructure Fund which should lead to an additional 650,00 new homes
• A limiting of lettings relief to properties where the owner is in shared occupancy with a tenant

There was vague talk about investigating ways in which unused high street properties could be converted into homes but there is nothing definitive on this yet. There was additional investment in infrastructure, with the North and the Midlands earmarked for significant funding, and a £30 billion fund to fix Britain’s roads. Economic growth from 2018 beyond is forecast to hit 1.6%, 1.4%, 1.4%, 1.5% and 1.6%. On the bright side, current forecasts suggest that the UK economy will avoid the much rumoured Brexit recession.

Milking the sector dry

Many property investors will breathe a sigh of relief at the lack of news regarding housing and property investment. The reality is that over the last two or three years the UK government has milked the sector dry. The UK now has the highest level of property taxation in the developed world. The authorities have squeezed the last pennies out of the sector, at least in the short to medium term, as we await the outcome of Brexit.

On the plus side, while we have seen an expected reduction in the value of London properties the rest of the UK is holding up far better than even the most optimistic of experts could have predicted. We have seen a growing disinvestment from London into different regions of the UK. The UK market is expected to continue this trend for the foreseeable future.

Should the authorities have given something back?

As concerns regarding Brexit have grown since 2016, while the housing market has performed fairly well, this sector was a relatively easy target for the Treasury. Opposition parties were crying out for increased taxation on property investors with property now the tool of choice for many people. Even though we have seen literally billions of pounds made available to first-time buyers, in reality house prices in many areas of the country are still well beyond their grasp.

After milking the property investment sector dry for the last few years there was no way the Chancellor was about to reduce that pain. Maybe we should be thankful that the authorities did not seek to increase taxes for property investors yet again?


The fact that the authorities have not introduced any new property taxes or increased existing charges should be taken as a positive. The sector is holding up remarkably well, relatively cheap finance is still available and many people see property investment as their pension fund of the future. Whatever happens with Brexit the UK population will continue to rise, demand for rental properties will grow and there will be many opportunities to invest. While some brave investors are taking advantage of the Brexit confusion to cherry pick “value assets” others appear to be sitting on the sidelines keeping their powder dry.

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