UK Budget 2015 – What does it mean for property investors?
While there were no real surprises in UK Chancellor George Osborne’s 2015 Budget, there remain some key changes that will affect property investors.
Driving homebuyer demand
One of the key takeaways for property investors from today’s announcements are new measures that will have a significant impact on increasing demand for homes in the UK.
Pensions
Those reaching retirement age in the UK will now be able to sell their pension annuity to a third-party for a lump-sum payment. This will introduce a new demographic of potential investors to the UK’s real estate markets as the country’s retirees look at investment avenues that had previously been closed to them.
With many UK retirees interested in the potential of property investment, this development is expected to have a marked effect on housing demand and will catalyse further price growth.
Help to Buy ISAs
In a bid to help first-time buyers get on the property ladder, the government has announced the implementation of a new savings scheme that will be available through all major banks. This will see the government contribute £50 for every £200 that aspiring homebuyers save towards their mortgage deposit, up to a maximum government contribution of £3,000. This will apply to those buying houses valued at no more that £250,000 outside of London and GBP450,000 within the capital.
With yet more buyers receiving a helping hand to purchase their first property, this is another measure that will increase demand and can therefore be expected to drive further future price growth.
Encouraging home building?
The UK still faces a housing shortfall – only 141,000 homes were built in 2013/14 which is less than half the number required to meet existing demand – and today’s budget announcements offered little to alleviate this.
Neither the creation of up to 28 housing zones outside of London – which could provide 45,000 homes – nor increased funding for the London Land Commission – tasked with mapping brownfield land to accelerate building – are expected to make a substantial difference.
The result? Investors can expect the country’s current supply-demand imbalance to remain in place for some time to come.
Boosting regional growth
Greater fiscal devolution to drive regional growth was a strong theme of this budget announcement. The government’s commitment to its Northern Powerhouse vision was underlined with Manchester handed the right to retain increases in business rates revenue. This move is expected to drive the delivery of city-specific infrastructure and regeneration plans, creating more opportunities for private and overseas investment. Cambridge and Peterborough are set to benefit from the same new powers.
Tax changes
The key taxation changes that will affect property investors is the introduction of Capital Gains Tax for overseas investors that was announced in the Chancellor’s Autumn Statement 2014. You can read more about this change in our Capital Gains Tax update from December.
Investors in UK property will also benefit from the faster-than-expected increase in the personal tax-free allowance for Income Tax, which will be raised to £10,600 from next month, and will reach £11,000 by 2017/18. This comes alongside an above-inflation increasing of the 40% tax rate band to earnings over £43,300.
If you’d like to know more about how these changes could affect you and your UK property portfolio, please contact [email protected] or visit us at www.ipglobal-ltd.com
ADVERTISEMENT FEATURE
Disclaimer
The contents of this article are for reference purposes only and do not constitute financial or legal advice. Independent financial or legal advice should be sought in relation to any specific matter. Articles are published by us without any knowledge or notice of the circumstances in which you or anyone else may use or rely on articles or any copy of the information, guidance or documents obtained from articles. We operate and publish articles without undertaking or accepting any duty of care or responsibility for articles or their contents, services or facilities. You undertake to rely on them entirely at your own risk, and without recourse to us. No assurance of the quality of articles is given or undertaken (whether as to accuracy, completeness, fitness for any purpose, conformance to any description or sample, or otherwise), or as to the timeliness of the publication.
Latest posts by Sally - Silversurfer's Editor (see all)
- Do you like the new Jaguar rebrand? - November 21, 2024
- Christmas Decorations Masterclass: Make your own Festive Wreath, Garland and Flower Centrepieces - November 21, 2024
- Finding warmth in cold days - November 21, 2024
- Fall in love with Norfolk Hideaways - November 20, 2024
- Would you prefer a cup of tea or a gin & tonic? - November 19, 2024
