2017 Spring Budget - What does that mean for property investors?
Budget News March 2017
Well, according to the chancellor, Philip Hammond, this is the last budget to be held in the spring and we will now go onto annual Autumn budgets, and good job too as this wasn’t helpful at all!!! It was also pitifully short at only 64 pages, whereas the budget last Autumn was 146 pages long.
Therefore there are only about 8 points that have any relevance for us as a group:
The bigger economy
The two crunch points in this announcement are not new to any Fielding Financial student as we include them every week in our introductory trainings which are:
- The GDP for 2017 is expected to be 2%!
- Employment is very high – and at its highest for 11 years - so that low unemployment means high demand for houses
The headline points for me are:
- The attack on entrepreneurs with the increase in class 4 NIC to 10% from April 2018 when it will be 10% and then the further 1% increase the year after to 11%
- The reduction in the dividend allowance for private company owners from £5k per year to £2k
I must say both of those are going to hit me in my personal pocket and it’s a shame that people who take responsibility for their own finances and personal economy and start businesses are being hit – this is just one more indication that the government wants us all running around in employed hamster wheels with jobs for life.
One good thing for small business owners though is the deferral of the quarterly digital reporting for businesses with a turnover below the VAT threshold of £83k.
Savers and investors
There were two announcements for savers and investors and that’s:
- The increase in the ISA limit from £15,240 to £20,000 from April – that means you can get a pitiful return on even more of your money than before! But of course, whatever you do get is tax free which is helpful
- The announcement of a new NS+I bond to be launched in April where people can save up to £3k and get 2.2% return. But don’t get too excited as the £3k allowance is for THREE years: and the return will mean a full £66 per year on the maximum savings - I hate to be churlish – but really?
Impact on Property Prices
It’s a struggle to find any news about property but one thing did jump out at me and that’s the increase in communication infrastructure monies for the National Road Network including:
- £690 million for new local transport projects, to improve congestion on roads and public transport
- £220 million to improve congestion points on national roads, with £90 million going to the North and £23 million to the Midlands
- supporting local projects in the next twelve months like improvements on the A483 corridor in Cheshire and on the Leicester Outer Ring Road
The emphasis is for roads NOT in the south and that will inevitably increase property prices near to those roads in the midlands and the north, and may do a little to close the gap between prices in the north and south.
This north/south differential varies all the time but is at its widest for many years at the moment so the softening of property prices in central London and boosts to the northern economy with road building should narrow that gap in the short term.
On similar lines with our UPWARDS criteria the additional 110 free schools (which will create 70,000 additional school places) may well drive localised prices up – but we don’t currently know where they are going to be.