Investors and property professionals breath a sigh of relief as no BIG changes made
Many investors and property professionals were waiting for yesterdays budget announcements by chancellor George Osborne with his eighth budget and hoped for not a repeat of last years where major changes where made to the buy-to-let market with regards to tax.
He confirmed the 3% addition to stamp duty for 2nd properties and buy-to-let properties will be going ahead however this will now be extended to all investors regardless of size.
The biggest news was a cut in capital gains tax (CGT) from 28% to 20% for higher rate taxpayers and from 18% to 10% for basic rate taxpayers from 1st April. However sales of residential properties will be excluded from this another blow to the buy-to-let investor.
“This is now the third Budget which directly attacks landlords,” says David Cox, managing director of the Association of Residential Letting Agents. “The sector has been punitively taxed, with stamp duty on buy-to-let properties, mortgage interest relief and now capital gains tax changes. It’s an outright assault.”
“Every other sector has been offered a tax break – yet there is nothing here to help the private rented sector, including landlords – and most importantly tenants – who will see rent costs rise to subsidise the taxes that landlords pay on property,” he says.
The National Landlords Association’s chief executive, Richard Lambert, is also disappointed.
“The steady upward ratchet of taxation on landlords over the past year shows that George Osborne is determined to bear down on the private rented sector, but he still depends on the tax revenues he expects to pull in from them,” he says.
“The NLA called for a short term easing of CGT to allow landlords to restructure their portfolios or to exit the market altogether but it appears that however much he wants us out, he can’t afford to allow us to leave.”
“The Chancellor continues his attack on rented housing despite all the evidence showing that landlords are taxed more heavily than home owners and that they buy and improve many properties that otherwise are left empty,” says Alan Ward, RLA chairman.
With budget changes made last year effecting landlords including the controversial new tax rule where interest from mortgage payments can not be offset against taxable profits many landlords are having to re-think their investment strategies.