Will George Osborne’s successor address one of the biggest problems of our generation in his first Autumn Statement?
In a month’s time, Chancellor Philip Hammond will deliver his first Autumn Statement. A lot is riding on it.
Many in the industry in fact are crossing their fingers that there will be another shock – in the form of a U-turn on George Osborne’s planned cuts to landlord tax relief.
It is not surprising that this issue tops the sector’s wishlist. The cuts to landlord tax relief have already caused turmoil in the buy-to-let world despite not being in play yet. We are sure to see further problems from next April if the new rules come into force.
But anyone holding genuine hope that such a reversal in policy will be on Hammond’s agenda is likely to be sorely disappointed. Aside from the fact U-turns are notoriously embarrassing for a government (and after the Brexit vote the current one needs to avoid more chaos), there is nothing to suggest Hammond and Prime Minister Theresa May do not fully support the former chancellor’s plans to squeeze the life out of the buy-to-let market.
Indeed, the Prudential Regulation Authority’s rules on tighter buy-to-let under-writing have come into play as expected.
According to reports, the money that the cuts will raise from investors has already been allocated and, as we have seen, lenders have started to adjust to the changes.
I fear the government assault on the buy-to-let sector will not stop any time soon.
So, if we cannot expect a U-turn on tax relief cuts as part of the Autumn Statement, what can we hope for? I think affordable housing will be high on the list of priorities. Hopefully, Hammond will announce plans to increase UK housing stock by building more affordable homes. There have been repeated calls for such action.
Stimulating the construction market in the wake of the Brexit uncertainty while simultaneously addressing the shortage of homes for low-income families would make for a good first Autumn Statement from this chancellor.
It is commonly known that Osborne failed to deliver on his housing pledges. So it will be interesting to see if Hammond can tackle, and solve, one of the biggest problems of our generation.
Ying Tan is managing director of Buy to Let Club