Stamp Duty Increase
The biggest headline for landlords from yesterday’s budget was undoubtedly the rise in stamp duty. A levy of 7% will be applied to properties worth in excess of £2m upon purchase. This is a tax that is certainly going to deter possible investors purchasing properties of that size and it is unclear how it will affect landlords. It could be that an exemption is brought in if the property is used for residential letting or if, say, a large property was developed and split into many smaller properties. This would get more homes on the market for first time buyers.
Top Tax Rate Cut
The figure that hit the news hard was a 5% reduction in the top rate of income tax. This could have interesting effects for the property market. A reduction in tax will give top earners a little more money to play with and they may choose to put this money back into property. More demand, of course, equals a rise in prices which will make the market more competitive but the value of your property more.
The amended forecasts for growth look positive for the UK and, barring a deepening Eurozone crisis, we’re firmly out of recession now. It might not feel like it for many tenants, however , and even if the economy is growing, that doesn’t mean people’s incomes are. Rent Guarantee Insurance is still vital as we’re still seeing increasing unemployment rates.
The budget could have been considerably worse for landlords and it looks like we have an interesting year ahead of us. The full budget report is still available online if you’re after more details but all that remains now is to wait it out and see how the changes take effect.