The Autumn budget was presented by the Chancellor of the Exchequer late last month, but what does it mean for property owners?
Overall, the Autumn budget was positive setting out an expectation that the UK economy will return to preCovid levels by 2022. Annual growth is set to rebound by 6.5% this year followed by 6% in 2022. This in itself, while not directly linked to home ownership, underpins a strong property market. Interestingly, there are limited changes to the tax and financial regime governing property ownership in the interim budget, but certain of the more general changes are likely to have a bearing on the property market as a whole. Inflation is set to increase which may impact the real value of homes if property prices don’t keep pace.
Capital Gains Tax Payment Period
The Autumn Budget included measures to increase the deadline for payment for Capital Gains Tax on the disposal of property from 30 to 60 days. This is designed to be a more realistic period for people to release funds to make the tax payment. This extension applies to residential property only and is for both UK residents and non-residents.
£65m Vulnerable Renters Support Fund
For the landlords amongst you, the £65m support fund designed to support tenants in arrears who may otherwise be driven into homelessness, may provide a means of collecting overdue rent. This will not in reality reach a lot of tenants and will be reserved for those hardest hit by the pandemic but will nonetheless help some landlords recover tenant debt. While this was announced prior to the Autumn Budget, it provides a key part of the economic commitment over the winter period.
Making Tax Digital: Income for Self-Assessment
For landlords among you, the government will give sole traders and landlords, with income over £10,000 an extra year to prepare for Making Tax Digital. It will now be introduced from 6 April 2024.
Interest Rate Rises
For those homeowners with mortgages, interest rates are one to watch this winter. For now, the Bank of England has held rates at 0.1% despite predicted increases in inflation of 4% p.a., but it is expected that they will start to move upwards later this year or in early 2022. For those with mortgages coming to term, a conversation with your mortgage broker might be worthwhile.
Other Measures Relating to the Property Industry
Residential Property Developer Tax
A tax on the largest residential property developers will come into effect from next April. The tax will be charged at 4% on profits exceeding an annual allowance of £25 million and is designed to ensure that the largest developers make a fair contribution to help pay for building safety remediation. This is unlikely to impact existing property owners but may, in time, have an impact on pricing of property in large new homes schemes by the larger developers driving prices upwards.
£24bn For New Homes
£24bn For New Homes To turn Generation Rent into Generation Buy, the government is building on existing commitments by confirming a nearly £24 billion multi-year settlement for housing development. This includes up to 180,000 affordable homes through investment of £11.5 billion in the Affordable Homes Programme.
Funding for Removal of Unsafe Cladding
The commitment to provide funding of over £5 billion to remove unsafe cladding from the highest-risk buildings, supported by revenues raised from the new Residential Property Developer Tax, was confirmed in the Autumn Budget. How this will be distributed is yet to be seen.
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Disclaimer: This blog post is produced for general guidance only, and professional advice should be sought before any decision is made. Nothing in this post should be construed as the giving of advice. Individual circumstances can vary and therefore no responsibility can be accepted by the contributors or the publisher, Gordon & Co, for any action taken, or any decision made to refrain from action, by any readers of this post.