Earlier this month, chancellor Jeremy Hunt gave his first Autumn Statement, and while some accused him of raising taxes to the highest level since the war, amid a raging cost of living crisis, mortgage adviser David Gissing says it was quite positive as a whole.
The senior adviser at London Mortgage Partners says the chancellor has made changes "in the best places" and the mortgage market has responded positively – some rates have even come down since.
The new government has announced a number of stealth taxes and spending cuts, including cuts to the capital gains tax allowance and a decision to sunset the previous government’s stamp duty cuts – though they will remain in place until March 2025.
Some in the industry have warned that in the buy-to-let space such policies could effect an exodus of landlords who see their profits dwindle further and try to sell up before being stung by higher CGT.
But in a Q&A with FTAdviser In Focus, Gissing explains why he believes this will not be the case.
FTA: What did you make of the Autumn Statement as a whole?
DG: Overall I thought the budget was positive and mostly expected, with no surprises. It has been mostly well received by the mortgage market, with no impact on rates. In fact we have seen rates continue to come down this week.
FTA: For the housing market we have seen a commitment to keep Kwasi Kwarteng’s stamp duty cuts until March 2025 on the one hand, but cuts to dividend and CGT allowances on the other. What effect will these have on the market?
DG: Keeping the stamp duty cuts makes the entry point to the market slightly easier for first time buyers and reduces costs for people moving home – this will benefit the south and south east the most.
Dividend and CGT cuts further squeeze some landlord profits, but will only see a small amount of extra tax when withdrawing profits. CGT will reduce profits on sale of the asset only.
FTA: What will the chancellor’s temporary commitment to the stamp duty cut mean for home buyers and house prices?
DG: This may encourage people to move or buy, which in turn should contribute to keeping prices up. However, I think the [previous chancellor's] increase to the SDLT thresholds have been long overdue.
FTA: Landlords will be particularly affected by the dividend and CGT measures. Do you foresee an exodus from the BTL property market?
DG: No. The reduction in these allowances will reduce profits, but not by a significant amount to any individual.
It could deter new landlords, as it squeezes margins slightly more and we may see some who want to exit if their yields are tight, but for the majority it will be a small hit and easily absorbed.
