The Budget in 2016 for the Property sector
It’s been an incredible start to 2016, many buy to let investors hurried their search to secure a purchase in time for 31st March 2016 when Stamp Duty rises by 3% on second properties. This month has seen exchange and completion levels at an all-time high. Solicitors and agents around the country are working all hours to ensure completions are taking place in time.
So what does George Osbourne’s 2016 Budget mean for the property market.
- Capital Gains – Currently 28%, being reduced to 20% from the 1st April, I thought this was fantastic, except looking at the small print, this excludes property and my bubble just burst.
- Stamp Duty – From 1st April, for people owning more than one property will increase by 3%. If a couple have split up, they will not be known as a single entity and therefore will be except.
- Speed up Planning & Zoning – to help boost housing supply.
- Rent a Room Allowance – Increased from £4,250 to £7,500.
- Freezing fuel duty and Improved infrastructure projects – will increase commutable distances and help businesses.
- Commercial Stamp Duty changes – 0% up to £150,000, 2% up to £250,000 and 5% above £250,000.
- Life Time ISAs – will be introduced to help under 40 year olds save a deposit for a property or their pension. For every £4 saved, the Government will add £1 – giving a 25% bonus on their savings. People will be able to save £4,000 per annum until the age of 50.
- 10% Wear and Tear allowance – will be discontinued on furnished properties, however, like for like replaced furniture can be deducted.
- Increase in Business Rate Relief – from £6,000 to £15,000 from April next year and the higher rate £18,000 increased to £51,000. The abolition of Class 2 national insurance for the self employed, in addition to tax free personal allowance increasing.
The stamp duty changes are going to deter some buy to let purchasers and second home buyers short term and this will have an adverse effect short term on the market until it becomes the norm. Transactions levels could decrease, which means supply will be short and property is valued higher because there is less supply.
The property market is incredibly busy and at Clifftons we are seeing record levels of business, the signs look positive for this year but who knows the future. The EU election this year will be interesting, see my other article: EU Referendum
If you are considering selling anywhere in the country, Call Clifftons today on 01202 789699.
Posted: 22nd March 2016