Chancellor George Osborne has just given his latest budget announcement, but what does it mean for UK property investors?
George Osborne’s Seventh Budget Looks Good For UK property Investors
Earlier this week, George Osborne took to the despatch box to put forward his seventh budget as the Chancellor of the Exchequer; the first budget he has delivered since the Conservatives landed their majority victory back in May.
Many of the government’s pre-election pledges were covered in Wednesday’s budget announcement, some of which are important for those involved in the UK property market. With that in mind, we have selected some of the key points for you to take a look at:
The Recovery Continues
The UK has made steady strides toward a recovery since the dark days of 2008, and the budget revealed that 2014 saw our economy grow by 3%. 2015 looks set to continue in much the same vein, albeit with a slight downward adjustment to 2.4% growth.
Tax cuts in the region of £24.6bn, negated by tax rises of £47.2bn, and an additional £35bn raised by welfare cuts are all aimed at keeping the ship steady and on course for further growth. The chancellor also announced that a million new jobs would be created by 2020.
Reduction In Buy-To-Let Mortgage Relief
From April 2017, buy-to-let landlords will see a reduction in the tax relief that they currently receive on their mortgage payments. The existing system gives landlords the opportunity to claim tax relief on payments in line with their existing income tax levels.
The change looks set to only affect a small amount of private investors from overseas who choose to put their money into UK property. Their top rate of tax is ordinarily in line with the basic tax rate and UK investors will only be affected if their income is above the £31,786 threshold.
The inheritance tax threshold has been increased by £350,000 to £1m. This was a pledge made by the Conservative before the election, and the move was expected and welcomed by many.
Another change will allow those who wish to downsize to still be able to apply their inheritance tax to the cost of the previous, and naturally more expensive, home. This, coupled with buyers selling many of their other assets in order to grow their estates, is expected to create a rise in buyer demand and support growth in the housing market.
Growth In The North
The Chancellor pushed forward with his plans to enliven the economy of northern England by confirming the devolution of services to Liverpool, Sheffield and West Yorkshire. Manchester has also been given control of planning.
£30m was also earmarked for a new governmental body, Transport for the North, which will aim to provide an integrated transport platform across the north of England. Plans include an Oyster-card like system for the region, the first of its kind outside of the capital
Corporation Tax Cuts
Inward investment looks set to benefit from the announcement that corporation tax will be cut to 19% and then 18% by 2020. It is hoped that this part of the Chancellor’s budget will stimulate business and create more jobs in the UK moving forward.
Non-Domiciled Status Scrapped
As of 2017, those who currently enjoy non-domiciled status in the UK will no longer benefit from the privilege. Anyone who has lived in the country for 15 out of the previous 20 years will now be obliged to pay tax at the same level of every other UK citizen.
The Future Looks Bright
Looking ahead, the UK looks set to enjoy continued growth as our economy remains stable. Many overseas investors may see the UK as a potential safe haven, especially in light of the Greek debt crisis, and the property market will continue to be attractive thanks to its low liquidity as an asset class.