Chancellor of the Exchequer, George Osborne, offered a modicum of help to UK landlords in his Budget speech yesterday in the House of Commons.
Although the main thrust of the budget concentrated on the fuel situation, the Chancellors attempts to encourage the business community as a whole should help the letting sector in more ways than one.
The change in how the rate of Stamp Duty Land Tax is calculated on purchases of multiple residential properties will almost certainly be roundly applauded by landlords. The calculation of tax due, will now be done on the dwelling’s mean value as opposed to its aggregate value, a definite help to some landlords. The Chancellor did put a minimum rate of 1% duty on any purchase though.
Another plus for landlords was the announcement that from 2012, Real Estate Investment Trusts (REIT’s) will be easier to set up. This should make them readily available to investors in the private housing sector and encourage long term investment. At least that must be the Chancellors intention.
These two tasty morsels from the budget coupled with the welcome news from the Financial Services Authority (FSA) that they will not ban interest only mortgages when it revamps the system, will surely encourage some landlords to get landlord insurance quotes on new properties. The outlook in general is still very good for the residential letting sector.
The Chancellor was not so generous to property players at the top end of the market though. He increased the duty on the most expensive homes from 5% to 6% saying, “There’s one area that needs extra work in the coming months, and that’s the taxation of very high value property, where evasion and avoidance are widespread and some of the wealthiest are not paying their fair share.
“So as well as reviewing revenues from the 50p tax rate, we will also be redoubling our efforts to find ways of ensuring that owners of high value property cannot avoid paying their fair share.”