The latest election result has once again surprised the pundits and the general election has ended in a hung Parliament. There can be little doubt that whatever your political views, a hung parliament at this very crucial time in our nation’s history is not good news. On a more positive note there will be much more cross-party discussion ensuring thorough and robust debate on key issues, most especially Brexit and the economy.
What’s happening with the housing market?
The housing market, is proving to be much more resilient despite the political uncertainty. The average property price in the UK hit an all-time high of £303,200 in May. Across England and Wales this year house prices have increased by 4.8%, a rise on the previous month’s 3.5% according to the most recent HPI from Your Move. The latest figures from the Land Registry showed that in March London prices increased 1.5% with outer London recording an increase of 5%.
Your Move said house prices rose by 0.3% month-on-month in May as the housing market remained strong. An estimated 62,500 homes changed hands in May, a substantial figure demonstrating the housing market remains buoyant.
How will this result effect landlords and tax?
If this minority government can survive, we would expect it only to do so without any dramatic changes to their agreed manifesto. Earlier this year even with the planned national insurance increase announced at the Budget, that even with a majority government it is difficult to do anything outside of the manifesto.
Therefore for as long as the minority Tory government is around, we should expect much the same. This could be seen as good news from a tax perspective, with the planned tax-free personal allowances and basic rate band increases to be introduced over the next few years, without any increases to Income Tax, Capital Gains Tax or VAT. For landlords this unfortunately also means that the deeply unpopular tax relief restriction on mortgage interest is expected to survive, with the gradual implementation continuing from now through until April 2020 when the full restriction is in place.
Tax is ever changing and evolving, with at least one Budget each year with the potential to change significant legislation each time. It is normal for there to be both winners and losers out of any Budget changes. Many feel that landlords have been on a losing streak in recent years under Tory guidance, and arguably this would continue under a Labour Government.
The great unknown for all is the Brexit impact – if things go well on negotiations, would the economy start to see improvements for all, such that tax levels could be cut, or will we see an expensive exit that will make current spending commitments and tax levels completely unsustainable?