Chancellor of the exchequer Philip Hammond will deliver his next Budget on October 29th 2018 – the government’s final spending plan before Britain’s scheduled exit from the European Union in March 2019.
The announcement has been scheduled a month earlier than usual, to allow more time for final Brexit negotiations with the EU.
Mike Jakeman, senior economist at professional services firm PwC, said this Budget will be a “very interesting one to watch”, largely owing to the current uncertainty around the UK economy.
There have been some positive developments in recent months, with economic growth picking up in the second and third quarters of 2018, and a lower-than-expected budget deficit in the first half of the year.
“These factors could give Philip Hammond some wiggle room to spend more money,” said Mr Jakeman.
“On the other hand, he has to find the £20 billion that Theresa May has already committed to the NHS by 2023, the government has announced that fuel duty will be suspended for a ninth year in a row, and he will want to keep some money in reserve in case the economy needs a boost after Brexit.”
With so many questions to be answered, property investors will be following the announcement closely for signs of how the housing market could perform and evolve in the near future.
Here are some of the key areas to keep an eye on:
Housing market policies
Given the current challenges in the UK property market – such as the supply-demand imbalance and the difficulties so many people face in buying their first home – housing will always be a key part of any Budget announcement.
In the November 2017 spending plan, key measures included the abolition of stamp duty for first-time buyers purchasing properties worth up to £300,000. The chancellor also pledged £44 billion in overall government support for housing, in a bid to meet the target of delivering 300,000 new homes a year by the middle of the next decade.
Property investors will be looking out for further changes to stamp duty and other key housing market policies on October 29th, which could have significant repercussions for buyers and also influence demand for private rental property.
With the likes of former foreign secretary Boris Johnson calling for major changes to reshape the housing market, this could be one of the most eagerly watched and hotly debated aspects of the 2018 Budget.
Prospects for the economy
Any individual or business investing in UK property – and particularly those from overseas – will be looking for reassurances that the economy as a whole is in a fairly strong position. This is more relevant than ever with Brexit just around the corner.
When it comes to making forecasts for the economy and planning spending, there is a strong chance Mr Hammond will take a fairly cautious approach until there is more certainty about Britain’s EU withdrawal deal and its potential economic impact.
However, there will also be some expectation for the government to follow up on the statements made at the recent Conservative party conference, when prime minister Theresa May said it is time for the age of austerity to end.
A recent report by left-wing think tank the Fabian Society argued that the government should scrap its austerity policies and focus on investment and spending plans that would stimulate the economy and support public services.
Property investors will have to wait and see just how positive the chancellor decides to be in his Budget, and how bright the picture looks for the British economy in the coming years.
Rates of capital gains and income tax are key considerations for buyers looking to maximise their returns from property investments in the UK.
The government’s current tax policies will be under particularly close scrutiny in the forthcoming Budget, as the chancellor looks for ways to fund increased spending on the NHS and other public services.
One possibility is the so-called ‘Amazon tax’ – a tax targeting the revenues of internet giants such as Amazon, Facebook and Google.
There is also speculation that the Treasury will reduce tax relief on pensions, which is thought to cost the government some £40 billion a year.
Rumours and forecasts will continue until the Budget is revealed on Monday October 29th, but with significant changes to taxation, economic investment and other key fiscal policies always a possibility, property investors should give close thought to how the announcement could affect them and their existing or prospective assets in the UK.
Visit Experience Invest on 29th October for the latest Budget 2018 property news.