Tag Archives: George Osborne

Budget 2014 – “For Makers Doers and Savers” Landlord News, Latest Articles

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.

  • All tax restrictions on pensioners’ access to their pension pots will be removed ending the requirement to buy an annuity.
  • The taxable part of pension pot taken as cash on retirement to be charged at normal income tax rate instead of the current 55% tax rate
  • There is an increase in total pension savings people can take as a lump sum to £30,000

For money in our pocket income tax levels:

  • The point at which people start paying income tax will be raised to £10,500 from the increase to £10,000 already for this April.
  • The 40p High rate income tax threshold is to rise from £41,450 to £41,865 next month and by a further 1% to £42,285 next year

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.Budget 2014

Autumn Statement 2013 and the housing market Landlord News, Latest Articles, Property Market News

The Chancellor, George Osborne in his Autumn Statement 2013 has confirmed that as from April 2015 foreign owners of UK property will pay Capital Gains Tax.

Foreign investment into the London property market in particular has been hotly debated including in Property118 as a cause for concern. The London market has been rising out of step with the rest of the country with fears of a housing bubble and inflationary pressures putting at risk the UK’s economic recovery.

Indeed it lead to the Bank of England withdrawing its support of the Funding for Lending Scheme to the whole of the UK’s housing market recently in an effort to cool future prices.

Mr Osborne said, “Britain is an open country that welcomes investment from all over the world, including investment in our residential property, but it’s not right that those who live in this country pay capital gains tax when they sell a home that is not their primary residence  while those who don’t live here do not.”

However I do think it is less about what is fair and more about protecting us from boom and bust pressures caused by the transient nature of foreign investment. Wealthy investors in particular from China and Russia have been buying properties in London as have Eurozone citizens hedging against a possible break up of the single currency.

There was also acknowledgement by Mr Osborne that housing supply must be encouraged to support a stable market and that £1billion will be offered in loans to boost housing developments in Manchester and Leeds, among other sites. Also that the Help to Buy Scheme will be further supported increasing demand and hopefully encouraging supply with Aldermore and Virgin Money adding to the availability of loans to residential purchasers.

Also the Housing Revenue Account borrowing limit which allows councils to borrow against its housing stock is to rise by £300m allowing greater flexibility in the provision of Social Housing. Councils will also be encouraged to sell off the most expensive social housing, Council Right to Buy Schemes will be further supported and rundown urban housing estates regenerated.

On the Banking side, which also has a direct effect on the supply and demand of housing, from the 1st of January 2014, the rate of the bank levy will rise to 0.156%. This is estimated to raise £2.7bn in 2014-15 and £2.9bn each year from 2015-16. Mr Osborne said that it was only right that the banking system continues to support the UK’s recovery.

£100 million of the fines raised from the Banking Libor manipulation scandal will also be given to military and emergency services charities.

Looking purely at Macro economics, growth forecasts for GDP this year increased from 0.6% to 1.4%. Next year revised up from 1.8% to 2.4%, and also up for the following four years to 2.2%, 2.6%, 2.7% and 2.7%. This would place GDP growth exactly where the Bank of England is targeting for the medium term without putting inflationary pressure on interest rates.

Government borrowing and how it is spending public finances and raising taxes is of a wider more political nature and not something I really want to get into in this report.Autumn statement 2013

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