Overall, the budget announcement on Tuesday the 22nd of June 2010 did not turn out to be the Black Tuesday many buy to let landlords were anticipating, as George Osborne the Chancellor of the Exchequer made his first Budget speech.
As expected yesterdays budget saw the increase in Capital Gains Tax (CGT) that most residential landlords were dreading, however, the hike was not quite as bad as most pundits forecast.
The headline budget news for landlords being;
CGT will rise to 28% for those on the top rate of income tax from today but will remain at 18% for those landlords paying the basic level of tax. The CGT allowance of £10001 will remain the same as will the enhancement rules.
Housing benefit will see changes with a new maximum limit of £400 per week for a four bedroom house or larger.
Holiday let landlords will see their allowances reinstated just weeks after seeing them disappear. For landlords considering moving back into this business they should bear in mind their residential landlord insurance will need to be changed.
Alan Ward, chairman of the Residential Landlords Association summed up the budget thus “The omission of taper relief from the Budget will work against landlords who have held property for a longer period. The increase in property value will largely be accounted for by inflation. The lower rates of CGT are little compensation for this tax on inflation. Restricting the higher rate to 28 percent for higher rate tax-payers is better than feared, but will cause some complications where property is jointly held by husband and wife landlords.
We are pleased the Chancellor has reinstated the allowances for holiday let’s and look forward to pursuing the case with his department that this should be extended to all rented residential accommodation.
The measures to promote job creation in the regions will have a positive effect on the PRS – private residential sector – which is the primary provider of short term housing.
The review of Housing Benefit will require consideration in detail, but we welcome the review and hope the opportunity will be taken to restore tenants’ rights to choose direct payment of allowances to landlords”