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There was no Buy To Let bombshell but what does George Osborne’s eighth budget as chancellor have in store for the property market?
As expected, yesterday’s Budget announced further spending cuts, an extra £3.5 billion by 2019-20 to be exact. The Office for Budget Responsibility (OBR) has forecast that the UK economy will expand by 2% this year, 2.2% in 2017 and then 2.1% in 2018, 2019 and 2020.
Often describing this as a “budget for the next generation”, Osborne is looking to offer ‘long-term solutions’ to ‘long-term problems’.
Among a number of property related announcements, there wasn’t the flourish that we have come to expect from Osborne in past Budgets nor were there any ‘headline grabbing’ measures like the ones announced in the Autumn Statement and last year’s Summer Budget.
Stamp duty for Buy-To Let
As expected, the Chancellor confirmed that 3% stamp duty surcharge on the purchase of second homes and buy-to-let properties will go ahead from April 1. News of this planned levy hit earlier in the year and we have seen a surge in investor purchases as would-be landlords attempted to beat the April deadline and avoid thousands of pounds worth of extra tax.
The Chancellor also announced that, contrary to rumour, larger investors will not be exempt from the stamp duty changes, ensuring that all purchasers of buy-to-let properties will pay the additional tax.
A blow for landlords
For the lettings sector, the biggest news concerns a cut in Capital Gains Tax (CGT), due to be introduced on April 6. Capital Gains Tax will be cut from 28% to 20% for higher rate taxpayers and from 18% to 10% for basic rate taxpayers. However, this will exclude residential property sales. This move has been condemned by a number of property market commentators, including David Cox, Managing Director of the Association of Residential Letting Agents (ARLA): “This is now the third Budget which directly attacks landlords”
He goes on to say, “the sector has been punitively taxed, with stamp duty on buy-to-let properties, mortgage interest relief and now capital gains tax changes. It’s an outright assault.”
“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,” he says.
Short term lets
As the popularity of short term letting increases, £1,000 a year tax-break has been made available for people letting out homes via websites such as Airbnb.
For the up-to-date advice on all your property needs, in light of the Budget, talk to our qualified staff at Swansea’s Bay Estate & Letting Agents.
There's a better way to sell or let your home. At Bay, we really know the property market. We're local and we'll gladly share our knowhow and experience with honest advice that will be just right for you. So whether you're buying, selling or letting, get in touch. We're here to help.