Having been in the job a little over a month, Coronavirus has somewhat overshadowed Rishi Sunak’s first government budget. Never-the-less, here are the announcements we feel will most impact landlords and property investors over the next five years.
Chancellor Rishi Sunak confirmed that non-UK residents investing in UK property would see a Stamp Duty increase to 2%, rather than the predicted 3% from April 2021. The government have pledged that the money raised from this increase will go towards solving the widespread problem of rough sleeping.
There has been criticism about the lack of review of the current Stamp Duty rules and rates for UK investors, now seen as a significant restriction for the property market. Hopefully, this will be next on the agenda, once the current health crisis has passed and a more ambitious reform plan can be made.
Rishi Sunak announced a £27 billion investment plan for UK roads which, while not directly connected to the property market, could create new property investment ‘hotspots’ and stoke-up the rate of surrounding house price increases where significant improvements occur.
This was part of the £600 billion planned spend on housing and broadband, which also includes a substantial investment in affordable housing to help those who have been outpriced by increasing average house prices.
Disappointingly for many, there wasn’t an announcement about a replacement for the Help to Buy Scheme, set to end in 2023. It’s left many wondering what help there is for first time buyers trying to get onto the property ladder. You can find out what alternative solutions are currently available to help you along the property ladder in our helpful blog.
A £1 billion fund will be available to leaseholders, via a grant process, to remove cladding that no longer meets fire regulations. The fund comes in response to thousands of owners being unable to move or remortgage due to their high-rise building being clad in the same or similar materials used on Grenfell Tower.
Business Rates Holiday
Business with a rateable value of less than £51,000, including shops, cinemas, restaurants and hotels will be eligible for a tax holiday over the course of the next year. Intended to help those likely to be most affected by the ongoing Coronavirus outbreak, this £1 billion tax cut is estimated to save businesses up to £25,000 in the tax year 2020/21. Hopefully, this saving will help small businesses who own or rent premises stay a-float during the unfolding economic turmoil we are currently experiencing.
Mortgage Guidance for the Self-Employed
As part of the Conservatives initiative to give businesses “high-quality support and advice in their region”, the chancellor has promised to improve mortgage guidance for the self-employed. The initiative is a move to ensure that those who are self-employed can also access the finance needed to purchase property here in the UK.
As expected, the threshold at which people start making National Insurance contributions will be from £8,632 to £9,500, a more substantial increase than had it just been in-line with inflation. The additional rise is estimated to benefit workers earning above the new threshold, on average, by £85 a year. Furthermore, the National Living Wage for those over the age of 25 was increased by 6.2%, equating to just over £900 more income a year.
Sources: BBC, Mortgage Solutions, Mortgage Introducer, Mortgage Strategy, Inside Housing
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