Over the past year and a half the housing market has been steadily recovering from the crash of the 2000’s. That is of course until the start of this year according to the new figures from the University of Ulster’s quarterly review showed a cooling of house prices in the first quarter of the year. The report suggest that apart from the fact that traditionally the first three months are slow for the property market external political factors such as the looming prospect of Brexit, the further restrictions on tax relief for landlords and the newly increased rate of stamp duty have not helped matters. Thankfully consumer confidence in property remains strong and although property prices have not increased in the last 3 months they have not fallen.
The possibility that the UK will leave the E.U. creates financial uncertainty as existing trade deals have to be remade, new taxes implemented and both these will have negative impacts on the financial markets and the currencies. In turn, this period of financial instability will negatively impact the local housing market as the public will wait until the dust settles and put off marketing their property or looking to buy a property. Following that the market will shrink and property prices will fall in the short term. As for the long term who knows? I personally cannot see how in the short or long term, the local economy will benefit from distancing itself from our closest partner in trade. The E.U. has for the last 40 years provided the North of Ireland with customers for our businesses, job prospects for our workers and huge sums of money in the form of grants and subsidies for our inner cities and agriculture (as well as the odd tin of dodgy stewing steak). The South of Ireland, the rest of the U.K. and Europe are who we do business with, it is madness to think that breaking these ties will somehow benefit us and that the rest of the world will be lining up to boost our economy if Britain chooses to leave the E.U. Therefore I would strongly suggest that in the up coming referendum we vote YES.
In the last budget Chancellor Osborne increased the rate of stamp duty for investment properties and second homes to 3% (previously 0) on all properties up £125,000, 5% on all properties between £125,001 and £250000 and 8% on properties over £250,001 and £925,000. His rationale for this was to ease the housing shortage by making it easier for first time buyers and less attractive for investors. Good plan you think? In theory this sounds sensible but the property market in N.I. differs from England and differs greatly from London, which is where the policy was primarily aimed toward. Northern Ireland was one of the worst effected regions to be hit by the market crash and whilst normality has been restored in the English and Welsh property market, here in Northern Ireland we are still not yet back to pre crash property prices. It is therefore imperative that Property transactions are attractive to not only First Time Buyers but also Property Investors. With regards to the idea that detracting Property investors will somehow solve the housing shortage - The private rented sector accounts for 20% of households within the region. Therefore sector provides much needed stock for social housing as the Housing Associations fail to keep up with the growing demand. Take away the Private Investor from the rental market the number of properties available to rent decrease, demand goes up, as do the rents. What we need is for Stamp duty and property tax to be set at a local level to reflect the needs of the local property market not the needs of the very different trends across the water. Now that our newly elected representatives have taken office and formed a government I think they should look at Mr Osborne’s policy and the negative impact it has on the recovery and growth of our local property market.
In conclusion, to ensure the continued recovery and sustainable growth of the property sector in Northern Ireland we must say “Yes” to remain in the European Union and “No” to restrictive property taxation from Westminster.
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