Fiscal Policy & Economic Backdrop
Summer 2018

The government is consulting on proposals aimed at the introduction of a minimum three-year tenancy model for renters. Tenancies would include a six-month break clause and exemptions for certain renters, such as students. Many buy-to-let landlords are welcoming the option of ‘financial incentives’, which it is argued could be quicker to implement than mandatory minimum terms, while build-to-rent operators are strongly supportive.

The 2019 Finance Act is liable to include new legislation on the payment window of capital gains tax on residential property which is set for implementation from April 2020 following the consultation earlier this year. The consultation proposed payments should to be made within 30 days of a sale, on a ‘payment by accounts’ basis as opposed to annually as part of the self-assessment process.

The UK economy grew by 0.3% in the month of May according to new monthly figures released by the Office for National Statistics. Economists are also expecting an uptick to be recorded in June following news by IHS Markit/CIPS UK PMI that both the service and construction sectors witnessed their strongest rise in activity since the autumn of 2017, while production output remains stable. Despite predictions it would rise, inflation (CPI) in the year to June remained steady at 2.4%, dampening expectations of an interest rate rise at the Bank of England’s 2nd August MPC meeting. Economic and Brexit uncertainty continues to affect the value of sterling, which has fallen back from its post referendum high in April and remains over 10% lower against the US$ than its pre-Brexit peak.