As the country and the property market begin to emerge from the relative inactivity of the previous lockdowns, a recuperation programme is beginning to take shape.
This involves a raft of inevitable tax changes and refinements as the government scours the coffers for the necessary funds to get the economy and the property market back on to their feet.
That picture is painted by some of the following property news headlines.
Budget changes and landlords
For landlords, some of the most significant – and potentially painful – changes on the horizon may be scheduled amendments to the tax regime. The chief features of the Chancellor’s latest budget were described in a piece by Which? magazine on the 3rd of March:
Income tax
- the income tax personal allowance goes up from £12,500 to £12,750 and the threshold for moving up from the basic rate of income tax to the higher rate increases from £50,000 to £50,270;
Corporation tax
- the news is rather less promising for landlords who have formed a limited liability company and who, therefore, pay Corporation Tax;
- first, there was probably a sigh of relief that there is to be no immediate increase – as was feared – in the current 19% rate of Corporation Tax;
- less welcome, though, is the news that, with effect from 2023, it will go up from19% to 23%;
- the Treasury defends the position by pointing out that even the higher rate of Corporation Tax is still the lowest of all the G7 countries and smaller businesses earning less than £50,000 a year will continue to pay at the lower rate of 19%;
Stamp Duty
- landlords hoping to invest in new property will have welcomed the Chancellor’s extension of the Stamp Duty holiday for a further three months until the end of June. From then until the end of September, Stamp Duty will continue to be zero-rated for property valued at up to £250,000 (instead of the current) £500,000, but from 1st of October 2021 will revert to its normal rate (paid on property valued at more than £125,000);
- the 3% Stamp Duty surcharge on the purchase of second homes – including buy to let property – remains in place throughout;
Capital Gains Tax (CGT)
- another area in which some property owners had feared an early increase was CGT;
- in the event, this has been held steady – again, against expectations – but remains scheduled for a thorough overhaul in 2026, according to an article in the FT Adviser on the 3rd of March.
Renting in the Capital is more affordable
The supply of private rented accommodation in London is bucking the national trend, reported Estate Agent Today recently.
Outside the capital, demand very markedly outstrips supply. But within London there has been a 30% increase in supply of rental property in January alone.
Although the market across the capital continues to be highly localised, the trends confirm a broad measure by which renting in the capital is becoming more affordable.
The new generation and what they do different when buying property
The pattern of homeownership – and the steps for getting on the housing ladder – are qualitatively different for the current generation, argued Wales247 on the 4th of March:
- renting presents more options for the kind of lifestyle they choose;
- longer-term mortgages are favoured;
- rooms may be sublet, or a home owned might be let to tenants;
- roommates are welcomed;
- homeownership comes later in life;
- smaller homes are favoured; and
- less expensive parts of the city are good for younger homebuilders.
Demand for rental properties beyond city centres rises
The demand for homes outside the major cities is some 21% higher than this time last year and those rental homes that are available are being let 30% more quickly than they were a year ago, said Property Reporter earlier this month.
The surge in demand for suburban and rural properties is fuelled by a post-lockdown demand for bigger homes that allow for more comfortable home working, access to a garden or other open space, and a lifestyle somewhat quieter than inner-city living.
