Explained
SEISMIC ACTIVITY AHEAD IN THE LAND OF BTL
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n first inspection, there was little in chancellor Rachel Following the Autumn Reeves’ first Budget to concern either mortgage lenders or borrowers. The most attention-grabbing Budget, landlords and announcements have proved to be those on inheritance lenders are facing an tax for farmers and increased employers’ national insurance contributions. incredibly complex and However, several aspects of this Budget are likely to create a landscape for lenders and have a long-term impact on the UK ever-changing landscape volatile mortgage industry, posing challenges for landlords and lenders alike. Alongside these domestic political factors, which are likely to when it comes to real impinge on the UK real estate finance market in the coming months estate finance. Alex and years, are global geopolitical changes that could prove to be critical. Edwards advises on evenBymore far the most prominent probable cause of a profound economic is the election of Donald Trump as the next US president. what to anticipate to shiftTrump’s second term, for which he is far more prepared than he previously took office in 2016, will be a White House with avoid disputes around when radically different policies and intentions compared with the previous loan enforcement administration. Under Trump’s leadership, the world’s economic will be more inward looking, adopting policies that could and recovery powerhouse lead to higher costs, higher inflation and, in turn, higher interest
rates in the US. These untested policies could impact growth in the US and in the UK. Renewed and potentially expanding conflict in the Middle East could have far-reaching global effects. Instability in Taiwan could be another source of major financial instability. Nearer to home, the fault lines of political cohesion in Europe appear to be fracturing. How these macroeconomic headwinds will impact the UK as it settles into having its first Labour government in 14 years is yet to be seen. While the latest economic growth figures may have dealt a blow to Rachel Reeves, the softer than expected inflation figures suggest that there is now an expectation of further interest rate cuts in the coming months which will be welcomed by borrowers. That said, with the concerns around the growth of the economy, the level of inflation predicted to remain around 3% for the rest of the year, uncertainty as to how fast interest rates will continue to fall and borrowers struggling when they come to refinance could therefore be the early indicators of a new or revived cost-of-living crisis on the horizon. While not directly linked, the tax-raising policies in Labour’s Budget will have an undeniable impact on the housing market. Shortly after the Budget statement to MPs in the House of Commons, UK
Words by
ALEX EDWARDS Director at Lawrence Stephens
Bridging & Commercial
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