How does property feature in the budget?
This year’s Budget was largely concerned with the resources needed to deal with the coronavirus pandemic, but there were a few announcements that could stir the interests of property owners and investors. The predominant measures are new taxes for property buyers from outside the UK, funding to remove unsafe cladding, a certain amount of spending on new homes delivery and money to tackle homelessness.
Let’s start with the announcement of a hike in Stamp Duty for overseas buyers.
Non-resident buyers of Britain property will have to pay an additional two per cent stamp duty, where previously they were subject to the same charges as UK buyers. Singling out overseas buyers for extra charges will actually bring the UK in line with many other global property markets, and is expected to affect around 70,000 of the UK’s total 1.2 million annual property transactions.
The new rules will come in from April next year, and the treasury expects there to be a surge in buyers ahead of the deadline. Income from Stamp Duty is expected to increase by £250 million in the coming tax year, before dropping by £355 million in 2021-22.
Where’s this extra money going to go? Chancellor Rishi Sunak has promised the cash injection will be fed into building 6,000 new homes for homeless people.
The next point of significance is the pledge of an additional £1 billion for the removal of potentially dangerous cladding from residential buildings, although frustratingly for some, this only applies to buildings that are more than 18 meters tall.
The government is also investing a further £9.5 billion in the Affordable Homes Programme, which in total will allocate £12.2 billion of grant funding from 2021-22 to support the creation of affordable homes across England.
This is a £3 billion boost to the current programme and will be used to support housing associations and to encourage developers to build new affordable housing.
There’s often omissions in a budget, and this is no different. There was no mention of the controversial ‘mansion tax’ or, most controversially, any new strategies to help first time buyers get on the property ladder.
The key element in this year’s budget is the rise in Stamp Duty tax for overseas buyers. If you’re thinking of investing in UK property and you’re from overseas, then you might want to keep that deadline in mind – April 2021.
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