Budget 2016 – Landlord reactions

Budget 2016 – Landlord reactions

14:00 PM, 16th March 2016, About 8 years ago 137

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The Chancellor George Osborne has just delivered his Government’s Budget.

Quick reference details for Landlords Below:

Stamp Duty surcharge of 3% on residential property to apply to all investors regardless of size.

Stamp Duty on commercial property transactions is to be reformed. Our understanding is that bandings will be applied similar to residential property, albeit with a zero rate up to £150k and then 2% of any amount over £150K and up to up to £250K and then 5% of any amount over £250k. As an example, on a property that costs £300,000 the SDLT would be £4,500 – i.e. £0 on the first £150k, 2% on the next £100k (£2,000) and finally 5% on the next £50k (£2,500). If our understanding is correct then this will also impact on on related transactions of 6 or more connected property transactions (e.g. at incorporation of a property portfolio). More on this HERE

Capital Gains Tax Reduced – from 28% to 20% for higher rate tax payers and from 18% to 10% for low rate tax payers from April 2016. However there will be an 8% surcharge on residential property leaving Landlords selling at the same old rate!

Maximum interest relief against profit capped at 30% of turnover, but this is only for the largest companies and will not affect Landlords. This was a concern for Landlords pre-Budget.

Tax free income tax allowance threshold – increased to £11,500 from April 2017

High rate tax threshold – increased to £45,000 from April 2017

Corporation tax – decreased to 17% by 2020

Insurance premium Tax IPT – increased 0.5% and funds raised to be spent on UK flood defences (£700million)

Fuel Duty – Frozen again this year

Class 2 National Insurance for self employed to be scrapped

The Office for Budget Responsibility has downgraded growth forecasts due to external economic headwinds from the uncertainty in the Global economy.

Growth for 2015 was 2.2% but the forecast has reduced from 2.4% to 2.0% in 2016 with 2017 growth of 2.2% and then 2.1% for the following years.

 


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Comments

Matthew Stuart Haig

18:27 PM, 18th March 2016, About 8 years ago

There is a 14 day cancellation policy, with Mark Smith. Haven't paid yet as they haven't rang me back. Need advice please?

NW Landlord

19:03 PM, 18th March 2016, About 8 years ago

The whole thing is a mess looks like there's going to be a lot of bags of keys getting posted

Nicholas Dickinson

19:06 PM, 18th March 2016, About 8 years ago

Reply to the comment left by "Mark Shine" at "18/03/2016 - 17:49":

Yes - I read Stephen Fay's viewpoint. Assuming it is not a breach of the mortgage conditions however there is no requirement to inform your mortgage provider. In such circumstances I find it difficult to see therefore on what basis they would be able to take the action Stephen suggests, but if you "sought their permission" there is little doubt they would not grant it. That doesn't make it a requirement to ask them. Others may take a different view, but I have satisfied myself that in my case the lenders' permission is not required

NW Landlord

8:47 AM, 19th March 2016, About 8 years ago

I think most lenders will be following suit me it makes sense for them to do it to protect there books and carry on what is a very profitable sector for the banks

https://www.landlordtoday.co.uk/breaking-news/2016/3/lender-encourages-landlord-incorporation

Carol Duckfield

8:59 AM, 19th March 2016, About 8 years ago

Interesting article on Inside Housing website after the budget.

Measures to increase housing supply may prove unsuccessful due in part to “conflicting policies around planning and affordable housing”, a house builder has warned.

An interim management statement published today by the Berkeley Group for 1 November 2015 to 29 February said reservations were 4% lower than in 2014/15.

The house builder said while it welcomed the government’s commitment to tackling the housing shortage, it was concerned that “supply may not respond positively”.

It blamed “complex and sometimes conflicting policies around planning and affordable housing; competing demands on limited and reducing public sector resources; and one of the world’s highest property taxation regimes”.

In the Budget on Wednesday, the chancellor announced several property tax changes in the Budget today, including a three percentage point stamp duty rise on any residential units not bought as a home, and a rise from 4% to 5% on the rate paid for commercial sites.

Berkeley said the government’s tax increases “will have consequential effects on both social mobility and the supply of new homes”.

However, the group said its board expected results to be at the “top end of expectations” for the current year.

It added that despite the uncertainty caused by the EU referendum in May, underlying demand for housing had remained strong.

Roger Cooper

11:06 AM, 19th March 2016, About 8 years ago

Reply to the comment left by "Ross McColl" at "16/03/2016 - 14:20":

Thanks for that article, Neil, and thanks to Ross for his comment as well.

I have recently put a BTL property on the market, and will ask my accountant how the new rules will affect me specifically. Adversely, I feel sure!

mark andrews

11:34 AM, 19th March 2016, About 8 years ago

Reply to the comment left by "Nicholas Dickinson" at "18/03/2016 - 10:18":

Nicholas, I'd strongly urge people not to do this without speaking to their mortgage providers. Many providers do not offer products for limited companies. It looks to me like by transferring to a ltd company and not informing your provider you will be in breach of contract, and committing mortgage fraud!

mark andrews

11:39 AM, 19th March 2016, About 8 years ago

Reply to the comment left by "S H" at "18/03/2016 - 08:09":

Hello Shirley,

Have you spoken to your mortgage provider to ensure that they are happy to have their mortgages held by a ltd company? I only ask because many providers (e.g. Virgin money) do not provide BTL mortgages to limited companies. This could mean that you need to remortgage with a new provider? Often mortgages for ltd companies attract higher rates.

Nicholas Dickinson

12:13 PM, 19th March 2016, About 8 years ago

Reply to the comment left by "mark andrews" at "19/03/2016 - 11:34":

Mark - that is correct if you were to transfer legal title but not if you only transfer the beneficial interest as the mortgage is attached to the legal title. No doubt whatsoever this is a highly complex area of law and no one should do it without getting good professional advice.

mark andrews

12:25 PM, 19th March 2016, About 8 years ago

Reply to the comment left by "Nicholas Dickinson" at "19/03/2016 - 12:13":

You'll need to check on this because I'm most (all?) cases this is clearly against the terms and conditions of the mortgage lender, and any landlord who doubts this can simply write to their lender to clarify the lender’s view. It is highly unlikely that any BTL lender would agree to the transfer.

Some mortgage lenders – such as Mortgage Express – are actively trying to reduce their loan book, and are looking for any reason to cite a mortgage breach as a reason to call in the mortgage. Other lenders with large loan books stuck on unprofitable (for them) Base-Rate trackers would be keen to learn of borrowers who had breached their mortgage terms and conditions, since the lender would then have a reason to call in the loan.

http://www.fyldetaxaccountants.co.uk/property-articles/clause-24-cant-i-just-transfer-personally-held-properties-personal-mortgages-limited-company/

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