14:30 PM, 19th March 2014, About 10 years ago 16
Budget 2014 – what are the main points for Property118 readers and the PRS.
The Office for Budget Responsibility (OBR) confirmed the GDP forecast to grow by 2.7% this year, 2.3% next year, 2.6% in 2016/17 and by 2.5% in 2018. GDP (economic output) will finally reach its pre-credit crises levels this year. This is a 3 fold rise in previous predictions last year.
The key hidden statistic given by the OBR in this budget was that they predict CPI inflation to remain at 2% (the Bank of England’s target inflation figure) keeping pressure to increase interest rates lower than would be expected despite improving growth levels. It is also predicted that earnings will rise faster than inflation again keeping pressure on the Bank Base Rate lower in the short term at least.
Lack of new property supply has greatly affected the recent rapid rise in house prices (mainly in the South East). The Chancellor George Osborne announced support for building of more than 200,000 new homes, Help to Buy equity loan scheme extended to 2020 and support for future new garden cities such as 15,000 new properties in Ebbsfleet.
The Chancellor will expand the tax on residential properties worth more than £2m to those over £500,000. He said “those properties bought through corporate envelope will be required to pay 15pc tax duty. Many of these are empty properties held in corporate envelopes to avoid stamp duty. This abuse will end.”
Many people who invest in property do so as some form of retirement planning and the unexpected “rabbit out of the hat” in this budget was an increase in peoples ability to choose how they spend their pension funds upon retirement.
For money in our pocket income tax levels:
The budget deficit forecast for this year is 6.6% of GDP, 5.5% in 2014-15 then falling to 0.8% by 2017-18 with a surplus of 0.2% in 2018-19. This will lead to a 40 Billion decrease in interest payments on the National Debt a saving of £2000 per UK family per year!
The Chancellor announced a total Welfare Spending Cap of £119bn for 2015-16, rising in line with inflation to £127bn in 2018-19. This includes Housing Benefit and how this will affect rent levels for Landlords in this sector will remain to be seen.
I put this budget to Property118 readers for your comments.
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