The Budget 2016 What does it mean for the property market?

Mid way through last week George Osborne unveiled his eighth budget as Chancellor in a speech that lasted just over an hour. He called it his “Budget for the next generation” with lots of talk of looking to the future. So in what ways will the property market be affected by this latest announcement?

Stamp Duty

In the Autumn Statement, Osborne clamped down on the buy-to-let sector, announcing a surcharge of 3% on the purchase of buy-to-let investment properties and second homes. Those with 15 properties or more would be unaffected. In a U-turn last week, the Chancellor has now proclaimed that everybody who invests in buy-to-let must pay the increased stamp duty, regardless of how many properties are owned.

Capital Gains Tax

In a further slant to those involved in the property market, Mr Osborne introduced a change to the Capital Gains Tax rates, only they don’t apply for residential property transactions. As of April this year, the higher rate of Capital Gains Tax will be slashed from 28% to 20% and the lower bracket from 18% to 10%. For investors in property, the rates will remain as they were, and therefore landlords and investors will not benefit from these changes.

HS3 investment announced

Osborne also announced that £300 million pounds will be put into the HS3 transport link to improve travel between Manchester, Leeds and Sheffield. The HS3 route is sure to add increased value to prices of property along its route. If you are looking for a new home or a solid investment, it helps to be in the know about new infrastructure plans.

Income Tax

No matter what you wish to invest in, everyone was given a lift by the news of a higher starting amount for the tax threshold. From 2017 it will have risen from £10,600 to £11,500. To find yourself in the top tax barrier of 40% you also now have to earn £2615 more at £45,000, meaning at both ends of the spectrum people will have the ability to save a few more pounds for a rainy day!

Lifetime ISA

In other big news last week, the new Lifetime ISA was announced by Osborne. From April 2017, anyone under 40 will be able to open up a new Lifetime ISA account. Up to £4,000 can be saved each year and savers will receive a 25% bonus from the government on this money. So in effect, for every £4 saved, the government will add an extra £1. There are rules on how you are allowed to spend your savings however. Lifetime ISA account holders will only be able to access their funds if they want to buy their first home, (which can cost up to the value of £450,000), if they have a terminal illness, or from the age of 60.

To summarise, although landlords may feel as though they are continuing to be singled out with the slash to Capital Gains tax on top of already rising Stamp Duty costs and a change to the way mortgage interest can be used, there is still money to be made in buy-to-let. It is simply now more important than ever that landlords are smart about where they are investing. If you are looking to get the best return from your investment, you need to be in the know about the up and coming property areas and infrastructure changes such as the addition of the HS3.

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