The Chancellor presented his fifth budget yesterday and is showing that he is cracking down on people buying homes through companies to avoid paying stamp duty. As of today, stamp duty now applies to properties worth £500,000 where there is 15% stamp duty. Rental properties are exempt from the increase as Osborne aims to reduce the number of empty homes across London: “None of this applies to homes that are rented out. Many of these are empty properties held in corporate envelopes to avoid stamp duty. This abuse will end.”
There could be significant impact on buy-to-let landlords, funds and housing associations. Although lettings will be exempt from stamp duty, there is still the complete tax return that will send costs up. The immediate predictions are that there will be a surge in BTL as pensioners may opt to use their pension pots to invest in property. The generous tax breaks and regular income may make this a more attractive option than buying an annuity.
Those involved in property have been hoping that Osborne might adapt stamp duty for the lower end of the housing market as the average house price is going up (currently at £250,000) but the stamp duty bandings have not been changed; an oversight on the part of the Chancellor.
Some more from the budget:
• Osborne has pledged to “get Britain building again” by giving up to £500 million to small building firms and £150 million to self-builders. Altogether, he has promised to 200,000 new homes for families.
• He has also promised to regenerate some of the worst estates in the country
• The Help to Buy scheme has been extended to 2020
• Some predict another surge in Buy to Let investors which will further price out young people thinking about buying