Yesterday’s Budget was attacked as a clobbering of the private rented sector.
The previously announced 3% Stamp Duty surcharge on the purchases of second properties will go ahead on April 1, with three main changes from the original proposals.
There will be no exemptions for larger investors – previously, it had been proposed that those buying 15 properties in one deal would be exempt.
The second change is that people who buy a second property as their home before selling their first, will have a longer window in which to dispose of their first home.
A timeframe of 18 months has been replaced by 36 months. The Treasury said that this would now be the time at which a refund could be claimed.
The third important change is that husbands and wives living apart, and intending to remain living apart, will no longer be treated as a single unit. That means that separating couples will not be faced with an extra Stamp Duty bill should one of them buy a home.
The Treasury has also clarified the position of probate properties, typically left to children in the family.
It said that where someone owned less than half of an inherited property, this would not be considered as an additional property subject to the surcharge.
Yesterday’s Budget emphasised that Capital Gains Tax is being reduced from April 6 – down from 28% to 20% in the higher band, and from 18% to 10% in the basic rate.
However, there will be an 8% surcharge applied to the sale of residential properties being sold by landlords – meaning that what they pay will stay the same as now.
David Cox, managing director of ARLA, said: “This is now the third Budget which directly attacks landlords. The sector has been punitively taxed, with Stamp Duty on buy-to-let properties, mortgage interest relief and now Capital Gains Tax changes [which benefit others but not landlords].
“It’s an outright assault on the sector.
“Every other sector has been offered a tax break – yet there is nothing here to help the private rented sector, including landlords – and most importantly tenants – who will see rent costs rise to subsidise the taxes that landlords pay on property.
“The Government talks about wanting to help the younger generation get on to the property ladder, but with the changes announced today the supply of available property is bound to decrease, and as a result rents will rise.
“In November, when Mr Osborne announced an increase in Stamp Duty tax on buy-to-let properties, we described this as a catastrophic move.
“The news that larger investors will also have to pay the tax is even worse.
“Professional landlords play a vital role in providing rental stock to the market, and providing the army of renters we have in this country with housing.
“Our members forecast that the supply of BTL properties will dwindle when the new tax comes in to effect.
“We’re already in a position where demand outstrips supply, and as supply falls, rent costs rise, meaning the goal of home-ownership falls even further out of reach for most of the country’s renters.”
The Budget has introduced a Lifetime ISA, allowing people under 40 to save up to £4,000 a year, with the Government topping up the pot by another 25% annually until savers are 50.
They will be able to use the money to buy a house or for their retirement.
NAEA managing director Mark Hayward said this was welcome news.
Incredibly short-sighted from the chancellor. I would love to hear him explain in clear “John &Janet book 2” language why he believes these measures aid or help FTB’s in any way. Additionally why he believes they aid or help tenants in any way. Finally why he believes that after years of successive governments encouraging people to look after themselves in old age, even down to allowing them access to their pension pots. He now feels the right thing to do is to go after the pension vehicle (BTL) that they put in place at his urging.
A failure on every level. And the really scary thing is my mental picture of them all sitting around a table saying “Chancellor we have a great idea for reducing house supply and increasing rents while simultaneously penalising people making provision for their retirement” ” Well done chaps, make it happen”
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
It is high time that a balance was restored to the market and time the BTL investors had a ****** nose, if only to make way for first time buyers and take the heat out of this highly over inflated marketplace. I don’t see one single of our investors complaining. It is time to stop winging and accept that we still have a very, very strong BTL market but, hopefully now, not one that is in get rich quick mode.
Any other route would just leave us heading for the inevitable abyss of a market collapse following further overheating.
Well done Mr Chancellor. For the first time in living memory the Government got it right when interfering in the UK property market.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
newsboy. Great rhetoric, great soundbites, no substance. No evidence that the FTB’s are kept from buying by BTL. In fact Countrwide showed that less than a third of investor purchases involved an owner occupier bidding for the property. On a personal level I have watched properties being overpaid for regularly by FTB’s driven by emotion. Long after an investor would have walked away because it no longer represented value. Oh well lets no let facts muddy the waters when their are soundbites to be had.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Mark from my experience in West London, that most vendors turn down offers from FTB when there is a cash buyer also available…
In the end, the property industry needs prices to inflate and huge demand to sustain lifestyle. I have worked in the rented sector for almost 20 years, and have not bumped into many poor landlords, so agree with Newsboy that we need to stop whinging!!
Also, when ARLA, NLA and RLA complain about costs to landlords/tenants, ask them how much they make from their stakes in deposit schemes?
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I can – in some way – see how this may be able to achieve the desired outcome in a market like London for example but there is once again a marked difference up here in the North. We work in one of the few areas where the average salary and property prices still correlate with a standard mortgage multiplier calculation and as such many people remain lucky enough to be able to afford to buy their first home. Despite that, the rental market is also buoyant here too for all the same reasons you might expect it to be elsewhere and we have a wide range of buy to let investors ranging from larger property developers to local people investing in their futures. What we have seen more recently as a result of this stamp duty revision is that some buy to let investors are lowering their potential purchase price to take into account the additional cost of purchasing and this is putting more investors in the same market as local first time buyers. This has the potential to do two things. 1, reduce the number of lower priced properties available to those first time buyers the chancellor is apparently trying to help and 2, potentially increase the average ‘lower end’ rent prices which in turn squeezes the pockets of those who are most vulnerable to being to stretched to accommodate living expenses anyway. I agree with others on the fact that I have little sympathy for larger investors, as they will no doubt find ways to recoup the costs and continue to make buy to let investing a viable business option for them. What I do have concerns about is how this will impact on the availability of properties for first time buyers here and in similar areas; and how it will change the behaviour of our local ‘hobby’ landlords who make up such a significant and invaluable part of our private rental sector. I am not sceptic and will continue to see how this all plays out but considering the funding raised from this measure is to be used to help FTBs in the South West, it would seem somewhat ironic that it has the potential to hinder FTB’s up here in the North.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Ossie & Co still don’t seem to understand the property market at all.
Yes the market is over heated in London and part of the South East. But it is a bubble that floats there and almost no where else.
He is using a sledge hammer to break a relatively small, al be it irritating nut. As a result he has caused and will cause considerable collateral damage all over the UK.
FTB are away for now because either they cant be ar5ed to save up the money or because the rent they are paying is absorbing all their cash so they cant save.
The bank of mum and dad has either dried up or they too have to keep the roof over their own heads, I should know I am paying £700 PCM to keep my daughter in a crappy ex council London flat shared with two other students and it really isn’t anywhere near up to date as one would hope. So when she wants to buy do I help her out? No she’s just had it to get her degree. (Well most of it) So Mr Osborne thanks
Thanks for FUC4 All
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register