George Osborne’s budget on 16th March was pretty disappointing for the property market and it does seem that opportunities to encourage investment and to build more new homes were missed.
The most important announcement was the confirmation that the 3% surcharge in Stamp Duty Land Tax (SDLT) on buy-to-let properties and second home purchases announced in the Autumn statement is to stay. Some commentators have suggested that this will push up rents, but we suspect that it will actually have the desired effect of making first time buyers more competitive in the market when bidding against a buy to let investor, who will generally pay a figure dictated by expected rental yields, not vice versa.
The expected waiver of the 3% for institutional investors who buy more than 15 properties has not happened, further removing the types of investment that could have developed brownfield sites and desperately needed build-to-let developments.
There was also a second kick in the teeth for second-home owners who not only have to pay the extra 3% on their purchase, but who continue to be taxed at the usual rate of Capital Gains Tax when they sell. This is 28% or 18% depending on earnings. CGT for sales of assets other than property has otherwise been slashed to 20% and 10% respectively.
Over 40% of stamp duty receipts come from sales in the London area, hence the Chancellor hiking SDLT in the autumn statement. This has without doubt played a significant part in slowing the London market since then providing the government with an annualised £740m less than they expected. It’s rather backfired and it is disappointing that the Chancellor didn’t correct this during the latest budget. A healthy property market is a key driver of a healthy economy – not so much in terms of property prices, but actual transaction volumes. Last month’s were the lowest for 14 years. Whilst this may support house prices, and hence confidence, it also fuels frustration from those buyers who just don’t have the choice they would like – which makes buying more difficult as well as expensive.
Whilst there is still a lot of confidence in the UK market, globally there are murmurs of weakening economies and some are suggesting harder times ahead again. But ultimately life goes on and there does not currently appear to be anything that should affect any plans you might have to move. After all – it’s ultimately your home and your choices should be made on what is best for your own personal circumstances.