Since the Emergency Budget last summer, landlords have clearly been in George Osborne's sights!
Clause 24 and the 3% stamp duty surcharge on investment properties has shocked the landlord community and made many landlords re-consider their property career.
It was feared that the 2016 Budget, delivered by the Chancellor on the 16th March, would contain more bad news for landlords, but that proved not to be the case.
We've put together some of the things for property people to be cheerful about:
Commercial property Stamp Duty:
A reduction in stamp duty for commercial property transactions was announced as follows:
> 0% on purchase prices of up to £150,000
> a 2% rate on the next £100,000
> 5% top rate above £250,000.
This new rate kicked in from midnight on 16th March.
Investment in flood risk areas:
£700 million was pledged to improve flood defences across the U.K.
This would be raised by increasing the Insurance Premium Tax by 0.5% which would only add around £1.00 to the average insurance policy.
Continuation of permitted development rights (PDR):
The Government confirmed the permanency of permitted development rights after they were announced by Housing and Planning Minister Brandon Lewis last year.
An amendment to Article 7 of the General Permitted Development Order has made the existing temporary right to change a building used as an office into residential use permanent, coming into effect on the 6th April 2016.
CrossRail 2 will go ahead:
CrossRail 2 will be commissioned and will improve connectivity from north London to south London through 49 stations and a tunnel. Building will start in 2023 and be completed in 2033. This may create opportunity for property investors, based on how significantly prices around Crossrail 1 stations have risen.
There will be further investment in the North of England to improve infrastructure.
The High Speed III train between Manchester and Leeds has been given the green light. This will reduce journey times by up to 40%.
There is a consultation planned for a new Trans-Pennine tunnel under the Peak District, running between Sheffield and Manchester which will improve commuter times.
Reduction in Corporation Tax:
Corporation tax will be reduced to 17% by April 2020.
For landlords who are buying property in limited company/SPV structures this is good news, and will be relief to those landlords who already decided to incorporate to beat the stamp duty surcharge deadline.
Digital Entrepreneurs Allowance
The Chancellor announced a £1,000 tax free allowance for those working from home and using digital platforms, such as Air B N' B for marketing.
Open Property Group Director, Jason Harris, commented:
"The Chancellor's obvious aim to professionalise the private rented sector and create barriers to entry for smaller "amateur" landlords continues. However, pressure on the PRS is only set to increase due to continued demand, and the landlords who remain will benefit from this through increased rents and a wider choice of tenants to choose from.
We were disappointed with the introduction of second home stamp duty as this measure will dampen our appetite for certain buy to let properties and add 3% transactional costs to future acquisitions. You can find out more about the new rates by clicking here.
According to recent data, rents are already on the rise - average rents are now rising on a monthly basis for the first time since September 2015, up 0.1% between January and February.
Rents across England & Wales now stand at £791 per month as of February, 3.3% higher compared to this point last year – or an extra £25 per month for the average tenant.
Property prices are also rising. According to the latest ONS data on house prices, the value of the average home in the UK increased by 7.9% in the year to January 2016, a rise of 1.2% compared to December 2015.
Unsurprisingly, London and the South East were the driving force behind this, but yields up north remain attractive to landlords.
Commercial to resi development and holiday lettings are two possible strategies to ensure a rounded portfolio that can withstand further Government meddling and possible economic shock through Brexit or such issues as social unrest".
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