On March 16th, Chancellor George Osborne delivered his Budget – perhaps one of the most controversial in recent years. Some of the proposed changes directly related to property, and may have implications for future property investment opportunities. Here’s a guide to the key Budget announcements affecting the housing market.
Investing in Property in the UK: Key Changes in the 2016 Budget
3% Stamp Duty Hike
Despite widespread protest, Osborne implemented the 3% Stamp Duty surcharge on buy-to-let properties for sale and second homes. This change comes into action from the 1st April, and means that those investing in property in the UK will pay an extra 3% against each price bracket.
Understandably, the decision has concerned many investors across the country, particularly when purchasing higher priced properties, as tax will now be considerably higher. However, the good news is that the rental market is performing exceptionally well – which may counter-balance this additional cost.
The Lifetime ISA
A rather more welcome announcement was the introduction of the Lifetime ISA, which will help first-time buyers to purchase a home. Available from April 2017 and only available to people under the age of 40, this ISA will support savers – with total savings into the ISAs for each tax year now £20,000 rather than £15,240.
In addition to Crossrail, Osborne commissioned Crossrail 2, which will serve to connect the south-west and north-east of the capital. He also approved the High Speed rail service between Manchester and Leeds. These decisions may have impact on property investors, as prices are likely to increase in the affected areas. Our recommendation? Keep an eye on the market and consider property investment opportunities in these locations.
Capital Gains Tax Reductions
Investors across the UK were pleased to hear that Capital Gains Tax had been reduced; from 18% to 10% for basic-rate tax payers, and from 28% to 20% for higher-rate tax payers. However, it wasn’t such good news for property investors – as this reduced rate will not apply against residential property.
Flood Prevention Measures
Osborne also pledged to invest £700million into improving flood defences for the UK – particularly in areas like York, Leeds, Carlisle and Cumbria. It’s obviously early days – but this move may impact house prices in the area, so again, it’s worthwhile keeping an eye on the market.
Property Investment in the UK – Is Now the Right Time?
The recent increases to tax, combined with the failure to reduce capital gains tax for residential property investment, has left many wondering whether now is the right time to seek out property investment opportunities.
However, whilst tax may have risen, it’s also true to say that the rental market has never been stronger. As less people are able to afford to buy property, more are turning to rented accommodation instead. Demand is high, and rental yields are also increasing rapidly.
The Buy2Let Shop
If you’re thinking of investing in property in the UK and want more information, talk to The Buy2Let Shop today. We’re a team of property investment agents in London, who are on hand to offer specialist advice, plus help you to find a suitable investment property that meets your requirements.
To find out more about our services, simply visit The Buy2Let Shop site today.