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> Granny Tax Budget Could Help Property Investors |
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Last week saw the third coalition Government budget,
and again the focus was centred on UK business growth.
However, some of the extra investment and tax reduction
measures announced by the Chancellor, George Osborne,
could help boost the UK property market and Buy
To Let investment in particular.
The
Chancellor of the Exchequer made 10 statements that
could affect buy-to-let property investors.
1.
The Office for Budget Responsibility (OBR) has revised
growth forecasts up to 0.8% this year, compared
with 0.7% in November 2011 and 2% in 2013, but OBR
are also sharply revising their forecast for Eurozone
growth from 0.8% down to -0.3% and their forecast
for world growth down by 0.2%.
If
the growth rates are correct and the Eurozone runs
slow compared to ourselves the outflow of foreign
workers we have seen over the last couple of years
will reverse. This is likely to see the demand for
housing increase even more in 2013. Growth for any
business is always welcome, especially if it is
steady and buy-to-let investment is no exception.
2. Inflation will fall to 1.9% by next year.
This
means that the Bank of England will not be under
pressure to raise interest rates.
3.
The Get Britain Building fund, providing up-front
money for construction firms is being expanded.
This
could help people buy their own homes. However,
effects could be localised to certain areas of the
UK.
4.
A new £70m development fund will be set up
for London, the Government will work with the Mayor
of London to extend the Underground, lengthen commuter
trains and look at new river crossings.
London
already has a healthy rental property market; extra
development and improved communications will further
increase property values and PRS rents.
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5. Improvements to rail services from Manchester
by extending the electrification of the Trans-Pennine
route between Manchester and Sheffield and
further improvements to the train lines between
Manchester and Preston, and Manchester and
Blackpool
The
improvement of busy commuter routes and communication
structures will see outlying areas of the
UK become more popular, increasing residential
property values and PRS rents into the bargain.
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6. There will be enhanced capital allowances
for business start-ups in 3 new Scottish enterprise
zones - Dundee, Irvine and Nigg and a Welsh
enterprise zone to be created in Deeside.
More
employment means more people needing to live
in the area leading to increased demand for
rental properties. Dundee has property prices
starting at £30,000 and the average rent
is £270 per calendar month. The area is
already benefiting from a huge investment program
and property investors are already seeing profits.
7. Tax changes to boost oil and gas extraction
in North Sea, along with £3 Billion (GBP)
"field allowance" to open up new oil
fields off the coast of the Shetlands, in the
North Sea.
Aberdeen
has a very good property rental market already
and increased investment will bring more employment
leading to an increased demand for quality rental
properties.
8. Corporation tax to be cut to 24% from next
month, 1% more than previously announced with
a target rate of 22% by 2014.
If
your property investments are purchased by a
limited company and profits are made there will
be a reduction in tax of 8.33% chargeable by
2014.
9. A clamp down on stamp duty avoidance. The
rate on properties worth more than £2
Million (GBP) purchased via limited companies
will be raised to 15%.
For
private individuals, Stamp duty will increase
to 7% (up from 5%) on properties worth more
than £2 Million (GBP). Most of the property
market won't even notice this, but it could
cause a slowdown of investments made by companies
targeting this high end niche market. For private
individuals an extra 2% on £2 Million
(GBP) is a large increase.
10. Personal income tax limit will be raised
to £9,205 from April 2013.
Disposable
income should increase. If this happens the
UK property market could see a lot more movement
and the next property boom could begin. So,
some encouraging news for property investors,
the UK could be able to sustain recovery in
the majority of the property market with further
investment by the Government in new build properties
and the banks being forced to improve lending.
So,
is now a good time to buy property? OF COURSE
IT IS!!!
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About
the Author
Mike Clarke
Mike
is the director of MyProperty PowerTeam.co.uk.
He has been investing since 2004 and owns property
across the North West and the North East |
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