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MS Leader: Budget that’s not for housing

Chancellor George Osborne’s third Budget was lambasted in the mainstream press last week, with accusations of granny bashing quickly eroding the chancellor’s claims that it promoted a fairer and more efficient tax system.

For the housing market there was little to be pleased about, with nothing to add to the NewBuy scheme. Although the government’s clampdown on Stamp Duty avoidance, where companies buy properties, has been welcomed in principle, the National Landlords Association’s fears that it could inadvertently hit buy-to-let investors is of concern.

On page 4 this week we outline BM Solutions’ research on 2011 rents and yields, which shows 4.8% growth in average monthly rents year-on-year. They are now £716, up from £682 in 2010.

In the popular press buy-to-let and landlords have a negative reputation, chiefly for snapping up properties that could be available to first-time buyers. But the reason rents are so high is that many are unwilling or unable to get on the housing ladder, and without a noticeable boost in rental property, rent inflation will only increase. Anything that stops landlords from expanding their property portfolios will hit renters in the most painful place – their wallets.

Meanwhile, this could be a good time for brokers, with lenders increasing SVRs and restricting criteria. Like someone dragging a stick across the bottom of a pond, this has unsettled borrowers who were happy to sit on their SVRs and hope for the best.

Now is the perfect opportunity to get in touch with clients to see if a more affordable deal is out there for them, and for those on interest-only, whether now is the time to finally talk about switching to a repayment mortgage.

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