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The Summer Budget – A Commentary


For those of us playing the inevitable, much loved game of Budget Bingo it was a veritable feast of expected hyperbole and sound bites. My own win came from my personal favourite, (really it is, or was), “we are fixing the roof whilst the sun is shining”.

That aside of course you can’t really argue that it was an interesting budget, even though much had been revealed before hand as is customary these days, apart from the bigger shocks – in the trade this is called “the reveal” I believe!

For us in the property market it was a tad disappointing not hear anything about a well worked out plan, led by a central, stable full cabinet member, to get the amount of new homes desperately needed built. A gloss over where planning and construction is concerned, whilst a momentary witter on about the Right To Buy scheme which many think will succeed only in cutting social housing stock further.


However there were some interesting pieces, not least the revelation that Buy To Let landlords will now only be able to claim tax relief up to the basic rate of tax; 20% rather than up to 45%. This is being phased in “gradually” from 2017.

To be honest this seems pretty fair and whilst I do understand all the arguments about Buy To Let being a business and therefore mortgage interest being a legitimate business expense there are a few things to consider.

Landlords are an important part of the housing sector, growing in importance given many Governments abject failure to address the supply side issues. However, it does without doubt make it more difficult for 1st Time Buyers who are often competing with landlords for the very same properties which all helps to push up prices.

As mortgage interest relief was axed for residential buyers some time ago, it seems right for them to be miffed that landlords still have that advantage. The argument is that if landlords want to run a business they should therefore buy the properties in company names and do it that way.

Limiting the tax relief to basic rate seems an ok middle ground proposal to start with, rather than anything more draconian which could have some more serious consequences. My fear is that with some landlords set to lose out on potentially thousands of pounds of relief per annum, this triggers rent increases in an already stretched market. This of course means more hardship for those trying to save to get onto the ladder in the first place.

It also means that some landlords could be more reticent, or just unable, to spend on upkeep of their properties.

Some landlords do have thin margins, especially in high priced areas where yields are low and this could make a significant difference in Buy-To-Let investment and cause an exit. But then again isn’t that the very point of this?

There are other landlords who will still feel comfortable with where they are and decide it is still very much worthwhile, so the freed up stock for other buyers will be most welcomed.

The question is that if the average or new buy to let holders suddenly decide to bow out and sell their properties, will this make a huge difference if house prices are high? Will it actually help the market or make it tougher for renters all round? It will be interesting to follow this one.

Elsewhere it was good to see a new Apprenticeship Levy for large employers, something Coreco has long supported and the New National Living Wage for all workers over 25 is a good move forward.

As for the rest, well it is all largely a question of politics and where you fall on the benefit cut / austerity argument. The discussions are set to run and run and …


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Andrew Montlake

Written by Andrew Montlake

Andrew Montlake, better known as Monty, began his journey with an Hons degree in Economics & Politics before starting in the mortgage industry in February 1994. As a main founder of Coreco in 2009, he successfully grew the brand, marketing, and communications, and was made MD in 2019 focussing on the overall vision, strategy, and culture of the company. As Coreco’s media spokesperson, Andrew can often be seen or heard on TV and radio as well as regularly commenting in the national, local, and trade press. He is the author of this acclaimed Mortgage Blog and is well-known for his social media, podcasts, and public speaking. Andrew is now proud to serve as Chairman of the Association of Mortgage Intermediaries, (AMI) as a cheerleader for the Mortgage Industry as a whole and continues to work at the coal face, writing mortgage business and advising clients.

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