As if the country wasn’t under a grey cloud of uncertainty with Article 50 triggered and BREXIT looming on the horizon, a new storm has fully brewed in the shape of a hung parliament. The snap general election did not deliver the expected result; therefore the future of our property and business markets is unclear.
While power wrangles continue in Whitehall, Klippa Relocation has taken a snapshot of the lettings landscape to see how the result may affect the buy-to-let and relocation markets:-
The supply of properties to rent may diminish – the tenant tax – officially known as Section 24 of the Finance Bill 2015-16 – looks set to say. This punitive measure will see landlords paying more tax, sending many into the red and possibly forcing them to sell their buy-to-let properties. Both the Conservative and Labour manifestos pledged to enforce the tenant tax, if elected, although we’re waiting for Theresa May to rewrite her manifesto in the wake of the Tory’s poor performance.
Changes are afoot if the Labour voice is heard – the supply of let properties may also come under threat if Labour’s demands on corporation tax are met. Mr Corbyn wants to increase corporation tax and that means landlords holding properties through structured companies will lose a tax perk, squeezing a let’s financial liability. Labour may also edge out short-term lets if their desire for three-year tenancies as the norm gains momentum.
A soft BREXIT is more likely – if you worried that a hard BREXIT would see businesses relocating away from British shores – taking skilled professionals with them – a coalition Government could be good news. More moderate, tempered voices may have a say on how we manage our EU exit, with a new focus on retaining strong European links and fostering better trade condition to keep big business and HQs in (and recruiting to) the UK.
We’ve got a new Housing Minister – the serving Housing Minister and author of the latest housing white paper, Gavin Barwell, lost his seat in the election, the new Housing Minister is Alok Sharma. Sharma is a chartered accountant and had previously worked in corporate finance before going into politics. Since becoming a member of parliament he has been on the Treasury select committee and the science and technology select committee.
Rents are falling – the latest buy-to-let index from agent Your Move showed that rents continue to fall in London – a downward spiral that’s been charted since November 2016. The latest average rent in the capital is £1,273 pcm in April 2017 – down 0.3% on March 2017 and 1.8% down on April 2016. Separate figures from SpareRoom released at the same time backed the trend, showing recent rents in London are down 1% when compared to the same point last year. It’s not clear whether the post BREXIT uncertainty reported to have dampened rents will be replaced by post-election wobbles, or whether rents may rise in the coming months as landlords leave the market, therefore limiting supply.
Rental demand will remain strong – by 2021 a leading agent suggests that the number of people looking to rent in the private sector will rise, with 24% of all households living in rented accommodation. In fact, the Knight Frank’s Multihousing Report suggests some 5.79 million households will be private renters by the end of 2021.
If you are looking to house relocating professionals in the UK and would like the very best advice on the current buy-to-let and short term rental market, contact Klippa Relocation today.