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Fairyland

Budget July 2015 Overall Hpc Impact

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Thought it would be good to have everything related to budget and it's impact on HPC in a single thread.

1. Benefit cap reduction -> downward pressure on rents -> downward pressure on house prices?

2. Tax credit changes -> will this result in downward pressure on rents and house prices in turn?

3. Tax relief, BTL changes -> reduced profits/losses in some cases -> will this trigger BTL sell off ?

4. 1% and successive rent changes -> downward pressure on rents -> downward pressure on house prices?

Feel free to add any other point that I may have missed. Media will soon come up with figures affected which can help us analyse further.

Edited by Fairyland

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So far,

- Approx 90,000 households affected by Benefit cap reduction.

- Currently interest payments of £100 only cost £55 after tax relief,but will cost £80 from 2020.

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Mortgage lenders have been taking tax credits into account on mortgage aplications for

some time now and borrowers battling the MMR lending criteria have been using them to increase the amount they can borrow.

So:

Reduced tax credits say £2k year av. Means less can be borrowed under MMR.

&

Existing mortgages that have taken tax credit payments into account in trouble when the reductions start april 2016 (due to clawback rates and thresholds being lowered)

Also trouble re-financing these mortgages with household income dropped.

Banks may even refuse to include tax credits in mortgage applications in the coming months due to the ongoing changes over the next 2/3yrs

Edited by workingpoor

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Thought it would be good to have everything related to budget and it's impact on HPC in a single thread.

1. Benefit cap reduction -> downward pressure on rents -> downward pressure on house prices?

2. Tax credit changes -> will this result in downward pressure on rents and house prices in turn?

3. Tax relief, BTL changes -> reduced profits/losses in some cases -> will this trigger BTL sell off ?

4. 1% and successive rent changes -> downward pressure on rents -> downward pressure on house prices?

Feel free to add any other point that I may have missed. Media will soon come up with figures affected which can help us analyse further.

5. Inheritance tax changes -> Housing given preference to productive investment -> Upward pressure on house prices.

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Sentiment.

Implied state support gone.

From gov always got your back to being thrown under a bus.

I agree. Osborne said this explicitly - "less state support, living within our means".

I also think it could have an impact on immigration. WTC cuts make the UK less desireable to move to (surely?). Not sure the living wage will fill the gap the WTC cuts leave behind. Will mean job losses surely - again, UK less desireable place to come to.

I don't trust Osborne, but was pleasantly surprised by this budget. We'll see.

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I agree. Osborne said this explicitly - "less state support, living within our means".

I also think it could have an impact on immigration. WTC cuts make the UK less desireable to move to (surely?). Not sure the living wage will fill the gap the WTC cuts leave behind. Will mean job losses surely - again, UK less desireable place to come to.

I don't trust Osborne, but was pleasantly surprised by this budget. We'll see.

+1

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Also, from (I think April 2016) there will be no increase in LHA for more than 2 children, so (as I understand it) if you have 2 children and another child after that date, then you only get the 2 bedroom rate (or 3 if you have vastly different aged children/different sexes).

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I can't see this as anything but a significant downward pressure. Key point: remember what H2B did to sentiment and to prices despite helping relatively few people. Remember what stamp duty holiday ending did to house prices a couple of years back.

It's all about sentiment

I think after a few days of media comment, the following will happen:

1. Anybody with a BTL property with a large mortgage that is presently not let will be on the market for sale - already seeing it i think here in Dorset - of 16 houses listed in 24 hours, 5 have no furniture

2. Any pensioners currently in the process of using their new pension freedoms to buy a BTL will pull out - i suspect there are a few but probably not that many

3. Anybody considering a BTL purchase with a large mortgage will drop the idea

4. Banks will rapidly tighten their lending criteria for BTL and probably withdraw from a few early stage transactions

5. The lack of greater fools will feed through to the house price index within 3 months and weakening sentiment on house price growth will weaken further

6. Lots of families considering upsizing or new buys but planning families will now start to worry about the safety of relying on tax credits to fund their lifestyles

7. All of this together can surely mean only one thing....

WE WERE RIGHT!!!

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