With the EU Referendum coming hot on the heels of the 2016 budget, the property market is being bombarded by change and uncertainty from a number of directions. The two key issues are the changes to stamp duty land tax (SDLT) and anxiety about the outcome of the referendum and Britain’s possible exit from the EU.
A recent discussion with David Ewington, Mortgage Broker at Enness Private Clients, brought out some interesting views and valuable insights.
The way stamp duty is calculated changed on 1 April. The amount of tax due is now calculated incrementally, as well as increasing by 3% across the board, meaning that many buyers are worse off financially. This has, understandably, led to a slowing of the housing market, but it hasn’t had the dramatic impact some commentators had expected, only causing a slight change of direction in the buy-to-let market.
David Ewington has this to say: “In the short period since 1 April, instead of leaving an asset class that has delivered both capital growth and income, we’ve seen investors shift towards limited company buy to let purchases. In the London market, the commonly-reported housing shortage means that rental demand shows no sign of slowing and basic free-market economics tells us that if demand is greater than supply, price only moves in one direction.”
EU Referendum and possible Brexit
Another threat to Britain’s housing market is the possibility of Britain leaving the European Union, aka Brexit. While the Remain Campaign appears to have more support, the uncertainty surrounding the outcome has led to a weak pound, impacting not only the property market but the wider economy. Research suggests that whichever campaign wins, there will be little impact for those buying and selling property within the UK. While there might be wider ripples affecting investment from overseas, experts at Enness warn us again knee-jerk reactions.
David Ewington says, “The looming EU referendum is impacting the wider economy, not just the property market. However, the general consensus is that we have more to lose than we have to gain by leaving. The reality is that the UK remains a safe and mature place to invest so longer term the UK property market will continue to be an attractive proposition.”