WHAT DOES 2017 HAVE IN STORE FOR THE PROPERTY MARKET?
Jan 12, 2017
How is this coming year going to affect the property market? After a surprising 2016 comes to an end with the nation facing Brexit to landlords having to understand new tax reliefs, we will be running through happened in 2016 and what is likely in store for 2017.
One of the biggest surprises of 2016 was the Brexit vote. As people nervously waited to see if there would be an immediate effect on house prices, the property market with the run-up to the vote did slow down. People quickly realised there was no immediate effect on the housing market, so the number of people looking to move again has been steadily rising since August.
Ed Stansfield, chief property economist at Capital Economics, says the property 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, not taking into account level of demand with a few areas bucking the trend due to factors like the additional runway planned at Heathrow.
Stamp duty changes
In April, it was announced that the Stamp Duty threshold for buyers of a second home or buy-to-let properties was lowered to £40,000, meaning anything above this amount was liable for stamp duty. A further 3 per cent surcharge was also 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 affect an upcoming property purchase you have planned? Check out this 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, so it will at least be 2018 until something is put in place.
Landlord Tax relief changes
It was announced that a five-year 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, this will come into effect with a decrease of 25% per year.
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 dependable agent like Harvey Victoria who are also members of NAEA (National Association of Estate Agents), ARLA (Association of Residential Lettings Agents), TPO (The Property Ombudsman) and a part of the Client Money Protection Scheme to take responsibility of that ownership removes all the risk associated to breaking the law and subsequently makes the job of being a landlord easier.
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.