Budget 2016: A Review

Budget 2016: A Review
After two consecutive government statements that directly affected the property industry, landlords and agents would have been forgiven some fear in the build-up to George Osborne's Budget.

The result was typically unsurprising. The Chancellor focused his attentions on future generations, saving methods and, bizarrely, a sugar tax on drinks manufacturers.

But he did have some significant announcements that were of interest to those interested in property. April's stamp duty levy was confirmed, but with the added curveball that landlords with large portfolios of over 15 properties will not be exempt from the surcharge, even though it had been speculated that they would avoid it.

The Stamp Duty surcharge has also been applied to the commercial property sector, including the 'slice' system introduced last year.

However, the timeframe for those selling their original property has been extended. If you have bought a second home with the express intention of selling the first, you will pay the stamp duty levy but will have 36 months to sell your original home and claim a stamp duty refund, as opposed to the originally speculated 18 months.

Mr Osborne also says that the money collected from the stamp duty levy will go towards community housing trust projects.

Furthermore, corporation tax was a talking point. Last year, Mr Osborne announced that corporation tax would be reduced to 18pc by 2020 (it is currently 20pc). This year, the Chancellor cut corporation tax even further, to 17pc by 2020. This could be of interest to landlords, who can turn their portfolios into private businesses and pay corporation tax instead of landlord taxes (which are set to increase from next year onwards).

Capital Gains Tax was also a talking point. The Chancellor outlined plans to give properties a significant 8pc cut from the tax they pay (currently 28pc for higher rate payers and 18pc for basic rate). The only demographic excluded from the cut? Residential property, that will have an 8pc surcharge added on to the 8pc cut, wiping out the tax saving.

Mr Osborne also had big plans geographically. The Northern Powerhouse was a primary point of interest. The Chancellor stated he will target key Northern roads including the M62 and has approved a HS3 rail service between Manchester and Leeds.

The implications of the Northern Powerhouse is that a lot of contractors and architects will be required to rent in the area while they complete their work, which means a minor boom of the rental sector in those areas most affected, like Hull and Leeds.

Prospective buyers will have been somewhat reassured. The Government is increasing the tax-free personal allowance to £11,500 in April next year, plus the introduction of a tax-free ISA that matches £1 for every £4 saved. This means savers can invest £4,000 of their own money and have it boosted by a further £1,000 of government money, either for pension savings or a house purchase.

However, no attempt was made to explain or tackle the housing supply crisis. First Time Buyers may have been given a route to saving more money for a property, but that doesn't mean that there will be any properties available to them!