What does the 2017 Spring Budget have in store for the property market?

14 March 2017  |  Admin  |  0 Comments

 

 

There was nothing much to shout about in relation to measures to boost the property market in the Spring Budget, which is a bit of a surprise given that the Government’s own Housing White Paper, published last month, admits that the housing market is ‘broken’ and says ‘For too long we haven’t built enough homes’. As is well-known, there is a shortage of affordable homes throughout the country, with the capital particularly badly affected. It would have been reasonable to expect the Spring Budget to address some of these issues, but perhaps we will have to wait for the Autumn Statement for the fixes.

Stamp duty

There were calls from many quarters to row back the stamp duty increase on second properties which hit buy to let landlords so badly, but the level of duty has not been changed.

So purchasers still take a hit of between 2% and 12% in stamp duty, depending on property values, with buy to let landlords having to add on a further 3% over and above those rates on second properties.

Most households are working to pretty tight budgets and many fall into the ‘JAM’ category, so it makes even more sense these days for sellers who are above the first rung of the property ladder to market their property using the services of an online estate agent, thus avoiding the huge commissions generally paid to traditional high street estate agents. Those savings will go nicely towards the stamp duty on the new property.

Room to rent relief

There are proposals, buried deep in the Budget documents, to scrap the rent a room relief. There are over 50,000 Airbnb hosts in the UK who might find themselves with an unexpected tax bill if the relief for short term lettings is scrapped. Hosts of short term letting properties should keep a very close eye on developments in this area. They may need to keep much more formal and extensive records going forward; it may be worthwhile starting to get those records in order now.

Capital gains tax

There is no change in rates for 2017/18, apart from the small annual increase in exemptions for individuals and trusts in line with inflation.

Savings

There is a little better news for savers, which may help those starting on the property ladder.

For those of you lucky enough to have a bit of extra cash to stash away for a rainy day, the annual tax-free allowance for cash and stocks and shares ISAs will rise to £20,000 from the current £15,240.

The Government has launched a new National Savings and Investment Bond which, from April this year, will pay a fixed, tax-free 2.2% on deposits up to £3,000 (subject to a tax maximum tax-free interest payment of £202 per annum).

Don’t forget the Lifetime ISA, also launching from April 2017. You can save up to £4,000 a year into the ‘LISA’ either as a lump sum or by putting in cash when you can.

Whatever you save, up to the maximum of £4,000, the Government will add a 25% bonus, so if you save £4,000 yourself in one year, you will end up with £5,000 with the bonus before any interest is added or growth taken into account.

Take a look at moneysavingexpert.com’s great guide to LISAs.

For first time buyers, don’t forget the Help to Buy ISA, which was launched in December 2015.

First time buyers who save into this ISA will receive a boost of 25% from the Government up to a maximum bonus of £3,000. This is a welcome addition to those on the road to saving a deposit. Check out the Government guide to this ISA.

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