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2015 Budget looks set to get Britain back on track
July 9, 2015Article by Ray Withers
Chancellor George Osborne’s 2015 Budget has received mixed reviews. While some have rejected it as being harsh for businesses, others have praised its aims of moving to ensure a living wage and boosting long-term economic growth.
The nation-wide view
In truth, the budget is something of a mixed bag, as it always is. The emphasis on devolution and finance for major cities looks set to drive regional economic growth, which is great news for local economies. The enhancement of key second tier cities should ensure healthy job growth and confidence in the local economy.
From a housing perspective, property investors in these areas should see an improvement to their already positive prospects, with stable, thriving local economies ensuring a balanced and demand-driven private rented sector, packed with tenants who are keen to rent high quality properties in prominent city centre locations. Buy-to-let apartments in cities like Manchester and in London commuter towns like Brighton should benefit, along with cities like Belfast, which looks poised on the brink of firm economic advancement.
The focus on moving to ensure a National Living Wage will also, over time, put more money in consumers’ pockets and drive economic growth. Starting at £7.20 per hour and rising to £9.00 per hour by 2020, the National Living Wage should encourage demand for home ownership in the medium to long term, while the enhanced economic situation of so many people will also support those who prefer to rent for the flexibility that it gives them as well as those looking to rent while they save up for a deposit for their own home.
Taxing times for landlords
Before the 2015 Budget was announced, rumours were rife that tax relief on mortgage interest for buy-to-let landlords would be abolished. The actual situation is far less daunting than many had feared, with 20% relief still available and changes not due to be fully phased in until four years from April 2017.
Over that period, the nation-wide benefits in terms of local economies and living wages should drive up salaries and incomes in order to support increased rents. The result of which should be that buy-to-let landlords are able to cover their position and counter-balance the tax relief change through increased rents for private rental accommodation.
Overall, the budget looks fairly well balanced in terms of supporting the UK’s economic growth – and a strong economy means good times for investors.