Having entered 2016 with optimism and all signs pointing at a buoyant market – the outlook was good! Little did the nation know what 2016 had in store for them.
From Brexit to tax relief for landlords, we’ll run you through what happened in 2016 and what is likely in store for 2017.
One of the bigger surprises of 2016, Brexit, seemed to cause activity slow down as people nervously waited to see if there would be an immediate effect on house prices but as there was not, the number of people looking to move again has been rising steadily since August.
Ed Stansfield, chief property economist at Capital Economics, says the housing market recovered “remarkably quickly” after cooling immediately after the UK’s vote to leave the EU.
For the movers that are not in a rush, the opinions around Article 50 and whether it will be a hard or soft Brexit may still cause a little delay to decisions. In general, property prices are expected to remain steady throughout the year (although obviously sensitive to level of demand) with a few areas bucking the trend due to factors like the additional runway planned at Heathrow.
In April, the stamp duty threshold for buyers of second homes or buy-to-let properties was lowered to £40,000 and a 3pc surcharge was introduced.
By November, these changes had brought in half as much money as the Treasury expected and were blamed for a steep decline in property sales, at a cost of nearly £1 billion to the UK economy.
Unsure how Stamp Duty could effect an upcoming property purchase you have planned? Try our Stamp Duty calculator.
Ban on tenant fees
The announcement in the Autumn Statement regarding banning tenant’s fees is likely to increase a lot of letting agency’s fees, however it will likely also push up rental values leaving landlords in an overall slightly better position. On top of this, rental growth could outstrip house prices over the next five years making buy to let a steady and reliable investment.
If the monthly rental costs do go up, we could see buying property becoming an increasingly enticing option over renting.
However, it’s worth bearing in mind that it’s widely anticipated that any changes to the tenant fee legislation will take 12-18 months to come into effect.
Tax relief cap on landlords
It was announced that a staged transition from 2017-2021 would move landlords to only receiving a basic rate reduction from their income tax liability, meaning they would no longer be able to deduct finance costs from property income.
Other legislation changes
Other changes we’re expecting to see include the creation of the ‘Renter’s Rights BiIl’ (which will include detail on the tenant fee ban), extension of HMO licensing (with an introduction of minimum room sizes), mandatory electrical safety checks, a rogue landlord’s and letting agent’s register and compulsory client money protection.
It is very important for Landlords to ensure they are completely up to date with all the legislation and the regular changes. Having a reliable agent like Love Your Postcode to take ownership of that responsibility removes all the risk and subsequently makes the job of being a landlord less stressful.
Number of sales
On the whole we are expecting a similar number of property sales in 2017 as there were in 2016. Most people moving home have motivations that don’t change just because of the political and economic landscape, if your family is growing and you need an extra room, that need is still there.
So overall, whether you’re buying, selling or investing, although recent events and surprises have slowed down the rate of house price increases, our view is that this is still a market worth investing in.
Still unsure about your own situation? Get in contact with your local branch today.