Propping Up Property

The UK economy is so strongly linked to consumer confidence and (most importantly) consumer spending. It is the oil for the UK’s economic engine.

 

Countless studies have shown that when house prices are good, we spend. Conversely, when our treasured homes are worth less or are falling, consumer confidence falls, we spend less and the UK economy shrinks. It’s a pretty straight forward equation and politicians are only too aware of it. Property is a big deal in the UK from an economic perspective.

 

With first time buyers becoming all but extinct over recent times, Buy To Let investors have propped up the lower end of the housing market and kept property prices ‘healthy’. However, a series of tax changes to Buy To Let properties has dramatically reduced their appeal from April 2017. It feels like death by a thousand cuts.

 

Westminster is all too aware of the negative impact of the reduced appeal of Buy To Let investing and instead is looking to invigorate the first time buyer market with subsidised homes. Thirty areas across England are to receive funding from the £1.2 billion ‘Starter Homes Land Fund’ for new developments on brownfield sites. Buyers must be aged between 23 and 40 and will receive a discount of at least 20% below market value.

 

On the upside, this can only be a good thing for first time buyers and it will increase the appeal of property ownership again.

 

On the downside, this was launched in 2014 and it has taken until 2017 for the first property to be built. The Conservative pledge in 2014 to build 200,000 homes by 2020 looks very optimistic.

 

However……it’s a start……it’s progress.