Let’s reflect. The world seemed orderly. If you had been investing in London, you were sitting very pretty (unknowingly at, or near, the top of a very hot market - blown up by £100bn+ of cash that had flowed into property in the capital since the 2008 “readjustment”). Buy-to-let in general was roaring forward in terms of the growth of the number of units in the sector. Economic growth was 3% (those were the days, eh - we target a shade over half of that these days, mostly thanks to the debt/fiscal drag of all the interest payments on the extra debt created since then).
It was the first budget that was “fully Conservative” since 1996 and Ken Clarke was chancellor, as we had just come out of a coalition government and into majority Conservative rule.
The BBC asked: “Why are we having another budget?” as the time of year is not typical for a budget statement. It was primarily about the fact there were no coalition partners to keep happy, and also to rubber stamp the austerity measures that characterise Obsorne’s legacy.
To readers (and writers) of this article, however, it meant much more. It was a step change moment in the relatively short history of UK Buy-to-let. It betrayed the loyalty of the landlord voters, and targeted revenues that were (in times of very low interest rates) arguably “above-average” profits (heh - remember those days?). This didn’t make the headlines at all, at the time - you need to go into the full report to uncover the actual wording.
The rhetoric was that landlords had “more support than ordinary homeowners” - and - you know the rest, mortgage interest relief would be restricted to the basic rate - although the full mechanics were not made clear on day one, there was mention of phasing in over four years. The cat was fully amongst the pigeons.
Personally, I’d been using limited companies for several years before that statement came out. I wasn’t smug - however - I was both interested and nervous. Would this be extended to limited companies (there are not tiered rates of course, so the mechanics would be different)? Would every property soon be owned by a property company (nearly nine years on, we aren’t there yet, but property investment companies are far, far more prevalent than they ever were)? Would this spell the end of the sector?
