Budget 2012 – Property industry reaction

Chancellor George Osborne has spoken. Here, key members of the British property industry deliver their  verdict on yesterdays Budget…

The British Property Federation said it had enjoyed lobbying successes in areas such as stamp duty land tax, which would not extend to commercial property, a consultation on the simplification of green taxes, and the NPPF, which retained the “presumption in favour of sustainable development” – all policies the BPF had championed ahead of the Budget.

However the BPF said the property industry was left disappointed by “small beer” tax increment financing proposals, the lack of Mortgage REITs to support bank deleveraging, and the Chancellor ignoring calls from his own backbench to provide empty property rate relief.

Liz Peace, chief executive of the British Property Federation, said: “We asked the Chancellor first and foremost to do no serious harm in his Budget to an industry that is still struggling – by and large we’re satisfied this is the case. It certainly could have been a lot worse.”

Adrian Coles, Director General of the Building Societies Association said: “Although we are not surprised, given how well trailed the content of this Budget has been, we are disappointed that there is precious little in it for ordinary savers and aspiring borrowers.

“The Chancellor has failed to take an easy opportunity to help UK savers by allowing them to use their whole ISA allowance in a cash ISA. He hasn’t helped those nearing retirement by permitting transfers of ISA money from stocks and shares to cash either. It is also a shame that the focus on stamp duty has been at the top end of the market, ignoring the cost of this tax for first-time buyers.”

David Salusbury, Chairman, National Landlords Association, said: “Regrettably, there has been no recognition in the Budget statement of the barriers to investment presented by the current system of property taxation.

“While the NLA believes the Government is justified in closing the Stamp Duty loophole to prevent tax avoidance, the Treasury should not ignore the impact these measures will have on legitimate companies which buy property to let as their primary business activity.

“This is likely to adversely influence investment decisions made by landlords who operate as small businesses and provide much needed housing.

“The NLA will seek discussions with the Treasury to see whether it is possible to differentiate genuine property businesses from companies set up purely for tax-avoidance.

“Calls for a comprehensive review of Stamp Duty continue to be unheard. This could have been a good opportunity to stimulate more investment and encourage growth in the residential property market.”

John Whiting, Tax Policy Director at the Chartered Institute of Taxation, said: “Nobody can be surprised at the decision to take action against SDLT avoidance. The targeting of ‘non-natural persons’ for both SDLT and CGT additional charges is an understandable attempt to catch all manner of vehicles but the legislation will need careful drafting to make sure the measures are practical and workable.

“It is also interesting to note the clear warning about retrospective action if people attempt to sidestep these new rules. The Chancellor is building some solid walls around the SDLT system and wants to make sure the foundations are equally watertight.”

Suren Thiru, Lloyds TSB housing economist, said: “The impact of the increase in the stamp duty rate for homes sold for over £2million on the housing market is likely to be very limited. However, strong demand from wealthy cash rich buyers, as well as limited supply of such properties, is likely to continue to boost the level of activity at this end of the housing market.”

Richard Gordon of UKPI said: “Overall this Budget has been well received within the property sector. However, as far as the UK property market is concerned, it is felt more could have been done in certain areas, particularly in the way Stamp Duty Land Tax (SDLT) is applied. The banding of SDLT means those buying or selling a property priced just above a particular threshold are disadvantaged.

“I am also concerned about the effect the 15% SDLT rate will have for Companies whose business is investing in blocks of apartments for buy-to-let. The additional tax could make certain deals financially nonviable. We await further clarification on this point.”

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Budget 2012 – Chancellor cuts 50p top tax rate

British Chancellor George Osborne has announced that the Government is to reduce the controversial 50p top rate of income tax to 45p from April 2013.

But his Budget has taken a swipe at the wealthy in a series of other tax and anti-avoidance measures.

Justifying the end of the 50p top rate of income tax paid on earnings over £150,000, Osborne said it damaged competitiveness and had only raised a third of the £3billion expected.

Instead, five times as much would be raised from the very rich by other policies in the Budget.

New “anti avoidance” tax rules would tackle the “morally repugnant” practice of people not paying the tax that they should.

Most notable of these is the plan for a staggering 15% stamp duty charge levied on people who buy expensive homes using offshore companies.

Individuals buying property costing more than £2million will also pay a new rate of 7%, up from the current 5%.

At the other end of the scale, the threshold at which income tax is paid – £8105 from next month – will rise to £9205 in 2013.

Osborne’s outlook for the economy in general saw the growth forecast for 2012 rise marginally from 0.7% to 0.8%.

He also said the Government was “on course” to eliminate the structural deficit by 2016-7.

And, while the UK was expected to avoid a “technical recession” the euro zone and oil prices remained a threat.

Unemployment is expected to peak this year at 8.7% before falling.

Osborne said it was a “Budget that rewards work”.

“Britain is going to earn its way in the world,” he said. “There is no other road to recovery.”

Source: Investor Today
 

ARLA calls for tax breaks for private landlords

The government should support growth in the private rented sector and remove barriers to further investment, says the Association of Residential Letting Agents (ARLA).

In a Budget submission to chancellor George Osborne, ARLA calls for landlords to be treated as entrepreneurial businesses for capital gains tax purposes, so that they can enjoy the same tax reliefs as other firms.

At the moment some landlords face bills of 28 per cent when they sell a property, which ARLA says prevents them reinvesting in the market.

It wants the government to allow landlords to take advantage of the roll-over relief available to other businesses and only charge capital gains tax on gains released from the business as a profit.

ARLA also wants the reform of stamp duty to remove the slab structure that it says unfairly distorts the market.

Ian Potter, operations manager at ARLA, said: “Demand for private rented housing continues to grow with 3.4 million tenants living in the private rented sector, an increase of over one million tenants since 2005.

“The tax system can be used by the government to incentivise investment in housing stock in the private rented sector and therefore improve the conditions in which those 3.4 million tenants live.”

Source: aboutproperty.co.uk