What Landlords and Investors can expect in the 2020 Budget

As we approach the date set by the newly founded Conservative government for the first budget while not affiliated with the DUP. Naturally, given our position as a property developer, we have a vested interest in seeing what impact the 2020 Budget will have on the housing market and for landlords too.

Stamp Duty could rise

Boris Johnson has continually stated that the UK Economy will receive a significant boost with tax cuts. This could include a change to Stamp Duty with the initial threshold being raised to as much as £500,000. This means that properties below this level will not have a stamp duty affixed. The amount does rise; however, based on the value of the property and is dependent on if the property is first, second or a buy to let property.

We’re unclear as to what the further information would be at this stage, but this does mean landlords could save up to £9,500 on properties worth £240,000. This is based on the three per cent surcharge currently in play up to £125,000 and 5 per cent on the remaining amount. The five per cent does have the 2 per cent standard rate and 3 per cent surcharge within.

Stamp Duty

In the event of there being reform to stamp duty and not an abolishing below £500,000 then landlords might only have to pay the 3 per cent on the whole amount. This would be welcomed by landlords who for some time have held the opinion that the government has been making it harder to rent property due to the taxes and regulatory changes over the last few years.

The mansion tax is rumoured

Introduced for 2020 could be the mansion tax, this is something that has been long considered by many governments over the years that means owners of expensive homes (over £1 million) would have to pay an annual tax. This is likely only to affect properties in exceptionally high-value areas such as London, where some two-bedroom apartments can be sold for as much as £5million in good locations.

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This is not very likely to be announced after Sajid Javid’s departure as Rishi Sunak is rumoured to dislike the tax according to government sources, but certainly, something that could be on a future agenda.

Investments will be safe, but investors may want to diversify

It is expected that there won’t be any changes to investment schemes or ISA allowances. However, property remains one of the safest sources of income on investment opportunities as with no changes it means there won’t be improvements, where property yields a return on investment far more significant than those seen with individual ISA’s. Mutual fund investors have been disappointed with initial reports due to the continuation of the LTGC tax on equities.

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If the housing market is offered the rumoured tax relief from stamp duty, it will make the investment much more attractive as it cuts down on the initial outlay and provides those seeking buy-to-let properties with a more significant reason to consider investing.

The property market is likely to see an influx of overseas investment.

If taxes are amended to bring a boost to the UK economy, then it is likely that overseas investment will flood in. Usually, investors wait to see how the UK’s economy reacts to specific events (such as Coronavirus, a new government, etc.). As a result, we could see that new property developments are in high demand throughout 2020.

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The government have identified that there is currently a housing shortage as they haven’t been keeping to targets they set a few years ago. There has been panic in this area, with houses being built on flood plains and below specification. These houses are poor quality and provide significant losses as investment opportunities. What will be useful for investors looking to take advantage of the 2020 budget, are apartments that have been renovated or redeveloped as there is a high demand for this kind of property, such as Bishopgate Gardens or Stone Cross House as these have significant rental yields. The rental market throughout the UK has seen a considerable boost in demand in the first quarter of 2020, and this is unlikely to decrease as people opt for flexibility in their living arrangements.

If you’re interested in any of our developments, then please call us on 01942 251945 or email us at info@heatongroup.co.uk.

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