Chancellor

As usual, I’ve taken a look at the Chancellor’s budget from a local property perspective.

Although I was secretly hoping for a U-turn on the Stamp Duty Surcharge, effective from 1st April, the fact that it didn’t happen wasn’t a shock. What did surprise me was that Mr Osborne’s budget extended the charge to larger scale landlords. Landlords with 15 or more properties had been exempt in last autumns mini-budget when the Surcharge was introduced. Now, all landlords will be caught, irrespective of the number of properties they already own. Although this seems fair, a number of our clients who have been planning to expand their portfolio are now telling me they will be thinking twice. If not regarding the principle, certainly with regard to the money the are prepared to spend on the tax.

Some will say such landlords don’t need more buy-to-let properties, and that the properties they would have purchased will now be available for first time buyers. This may well be true. However, every day I see the significant shortage of rented accommodation for those who cannot afford to buy. With little rental stock coming to market the strong demand and poor supply is pushing rents up. Larger scale professional landlords help to provide the supply to this market.

I was also disappointed to see that the reduction in Capital Gains Tax rates from 28% to 20% for higher rate, and 18% to 10% for basic rate taxpayers does not apply to residential property. Lowering the rates in line with other investments would have encouraged reluctant landlords (of which there are many from the 2008 recession) to sell their buy-to-lets, making more property available for first time buyers.

With no giveaways it looks like it’s business as usual for the property market for the rest of the year.

Michael J Moore FNAEA, MARLA – Senior Partner @ Moores Estate Agents