The Chancellor, George Osborne, has announced a series of measures impacting on the property industry, including:
- Mortgage interest relief for buy-to-let homebuyers to be restricted to basic rate of income tax (“This a major blow to a sector that is heavily reliant on private investors and who provide a crucial supply of property to the private rental sector” says Nick Leeming of Jackson Stops & Staff);
- Rent A Room tax relief increased to £7,500 pa after 18 years at £4,250 pa;
- An increase in the inheritance tax threshold to £1m for married couples by 2017 (Glynis Frew of Hunters Property Group says “the last election taught us that home ownership is very important to the nation and when people have worked hard to own a residence and have already paid taxes they should be able to pass this onto their children tax-free.”)
- Making council and housing association tenants in England who earn more than £30,000 - or £40,000 in London - pay up to the market rent
- Confirming Help To Buy ISA and the expansion of Right To Buy for housing associations, plus new planning reforms to be announced on Friday;
- non-doms with residential property will pay same tax as UK owners and permanent non-dom tax status will be abolished (coming into effect in April 2017) - this may have a major effect on high-end residential markets, especially in prime central London;
- increasing HMRC’s powers to pursue tax avoidance, including that conducted by overseas-based companies operating in the UK.
Other key parts of the Budget announcement are:
- Spending cuts by government departments to be announced this autumn;
- Forecast of UK enjoying 2.4% growth in 2015, 2.3% in 2016 and 2.4% in 2017;
- UK growth forecast to be stronger than US, Germany and France;
- Budget deficit down from around 10% of GDP in 2010-11 to forecast 3.7% in 2015-16;
- Budget surpluses to be achieved by 2019-20.