Category: stamp duty (3)

Twice as many home owners in the UK support the new 3% stamp duty surcharge on additional homes as oppose it, despite loud opposition from landlord groups, new research shows.

Some 47% support the extra charge which was introduced on second homes and buy to let properties on 01 April while 18% are against it and believe that it supports first time buyers.

The results of the poll show that overall concerns about stamp duty have fallen dramatically since the reforms in 2014.In 2014, some 64% of UK adults believed that stamp duty was a serious problem but in 2016 that has fallen to 52%.

Supporters of the stamp duty surcharge on second homes believe the measures are a good way to level the playing field between those buying a home to live in and those making an investment purchase.

‘The buy to let market is slowly destroying the overall housing market and making affordable properties less available for those wanting to own a home as their principal place of residence,’ said one survey respondent.

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The research also found that some feel there has been a shortage of homes available for first time buyers and this will make it harder for buy to let investors competing to purchase similar properties.
It found that there are some anti buy to let feelings, a sense that buy to let may have been inflating house prices and pricing out local residents in some areas. Some also feel that those able to afford to buy a second home or to buy a property for the purpose of letting it out and making profit should be able to afford to pay higher stamp duty on their purchase.

Those who oppose the stamp duty surcharge on second homes suggest the policy could have unintended consequences such as the surcharge being passed on to tenants in the form of higher rent. Comments also indicate that they feel the government is making another tax grab or that the policy is anti-enterprise.

Paula Higgins, chief executive of the HomeOwners Alliance, thinks that the British public believe that homes are for living in and not speculating with. ‘The stamp duty surcharge might be bad for landlords but it will allow more young people to realise their dream of owning the roof over their head,’ she said.
‘This is why we initially called for the tax system to differentiate between aspiring homeowners and property investors. However, we must see the money raised ploughed back into building more affordable housing,’ she added.

According to the Royal Institution of Chartered Surveyors (RICS), the UK housing market looks set for a slowdown in the run-up to June’s referendum on EU membership, according to surveyors. Price growth for the next three months is expected to fall to its slowest place in almost a year but RICS’ members still saw strong underlying upward pressure on the housing market.
Shares in FTSE 100 house builders fell, including a 6% drop for Charles Church owner Persimmon, despite a trading update showing forward sales up 8% to £2.15bn for the year-to-date. Berkeley, Barratt and Taylor Wimpey shares were also lower.
Meanwhile the effect of a rush to beat a 1 April stamp duty increase for buy-to-let investors has also now ended, taking some of the heat out of the market. As expected, the buy-to-let rush has now run its course, and as a natural result, the market is starting to slow.
RICS’s index for price increases for the next three months was +17 in March from +21 in February, its lowest since April 2015 – a month before last year’s General Election. Its monthly house price balance fell to a nine-month low of +42 from +50, below economists’ forecasts.
However, the survey said that over the longer term prices are still expected to rise by more than 4% a year for the next five years across England and Wales, as demand in the housing market continues to outweigh supply.

In case you were visiting another planet this week and missed it, the 2016 Spring Budget popped out of George Osborne’s little red briefcase like a bouncy Easter bunny. Sadly, not bringing chocolate with it…but some good news for the property sector.

1. First-time buyers saving for a deposit given a boost

The Chancellor announced a new Lifetime ISA, which will be available from April 2017 for savers who are aged under 40. Holders of the Help to Buy ISA, which launched last December, will be able to roll up any savings into the Lifetime ISA without losing their tax-free benefits.

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Total savings into ISAs each tax year – whether used to buy your first home, move up the property ladder or other purposes – will leap from £15,240 to £20,000 from April 2017.
2. Osborne’s 3% Stamp Duty surcharge pressing ahead from April

The Chancellor stuck to his guns on implementing a 3% Stamp Duty surcharge on the purchase of additional properties – the loading will come into effect from 1 April as planned. Based on the £290,902 current average value of a UK home, the new 3% loading will see prospective landlords and second homeowners see their Stamp Duty bill soar from £4,545 to £13,272.
Did you know? The 3% surcharge won’t apply to property priced under £40,000
The Chancellor confirmed in his Budget that larger residential property investors will be liable for the 3% surcharge – in the Government’s initial consultation, investors ‘bulk buying’ 15 or more residential homes had been earmarked for exemption.
The 18-month window during which time those buying a new main residence but unable to sell their previous one, could claim a refund of the 3% surcharge, will be doubled to 36 months. The same grace period will apply if a main residence is sold but there is a delay on the purchase of a new one.
Osborne said he will use the additional tax raised to support community-led housing developments, such as a £20m project to help young families onto the housing ladder in the South West of England.
He also announced a major new package of support worth over £115 million to support those who are homeless and reduce rough sleeping.
3. Stamp Duty slashed on commercial property

Buyers of commercial property will benefit from a cut in Stamp Duty rates. This includes a zero band on purchase prices of up to £150,000; a 2% rate on the next £100,000; and a 5% top rate above £250,000.

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4. High speed rail links are full steam ahead

The Chancellor gave the green light to the High Speed 3 rail service between Leeds and Manchester. This will reduce journey times by 40% and will allow people to live easily in one northern city and work in another, a pivotal factor when it comes to where to buy a home.
Osborne is taking recommendations from the National Infrastructure Commission on northern connectivity and committing £300m towards High Speed 3 and road upgrades. This includes a new Trans-Pennine tunnel under the Peak District, running between Sheffield and Manchester.
He also commissioned Crossrail 2, which will connect south west and north east London, while reducing congestion on the Tube network and pressure on Victoria and Waterloo stations. The government will be putting £80m towards the project.
The first Crossrail – or the Elizabeth Line as it’s now known – has already had a dramatic impact on the property prices along the route (see below for our infographic) and Crossrail 2 could have a similar effect.

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5. Capital Gains Tax reductions – but not for residential property

The Chancellor slashed the rate of Capital Gains Tax from 28% to 20% for higher-rate taxpayers, and 18% to 10% for basic-rate taxpayers. But buy-to-let investors won’t benefit, as the reduced rate will not apply to residential property.

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