The Budget 2015

The Budget 2015
The Chancellor heralded his first Conservative Budget since 1996 as a 'budget for working people'. He took the opportunity to comment on many of the Conservative manifesto commitments, including tax avoidance and aggressive tax planning. He also announced wide-ranging reforms to the taxation of non-UK domiciled individuals and investors, with a particular focus on landlords.

So, what does it all mean for you? And what, if any, impact is it going to have on the property market and buy-to-let investments? The short answer is 'not a lot' but the long answer is more complicated. I'm no accountant but will do my best to explain what impact the changes may make.

Non-domiciled individuals If you are (for example) an Arab sheik who lives in the UK but is 'domiciled' i.e an official resident of Qatar, and have been living in the UK for more than 15 years, you will now have to pay income tax (and capital gains tax) just like any other UK resident. What is the effect? London may not be as attractive to overseas investors as before but the real impact of this, I feel, will be small. The UK is still an attractive property market and investors know this and I cant see the property market in Cornwall affected by this at all.

Tax avoidance The deduction of certain allowable expenses from rental income will be restricted for landlords from 6th April 2016. This is basically the 10% tax relief landlords can claim on furnished properties (wear and tear) and restricting the amount a tax relief on mortgage interest to 20% whether you are in the 20% or 40% tax bracket (although this will be phased in over the next 5 years). If you have a furnished property and your total income is in excess of £42,385 this is not good news!

Tax planning Some changes to savings allowances, pension allowances and tax on death benefits but all of these will have little or no affect on the property market.

The chancellor has stated that the main rates of income tax, national insurance and VAT will not change for the next five years which should help buyer's confidence. 
Nationally the news is that house prices continue to rise 5%+ per year. However this is heavily skewed by London and the South East. The real figure for the South West is more like 2.6% and again supported by large cities such as Bath and especially Bristol.

So, does all this mean more people will be buying houses, or will the demand for rental stock continue to grow as it has done? I don't think what the Chancellor has done will make a big impact on us here in Cornwall. Local businesses, the hospital and college are growing and taking on more staff, the average local wage, and the amount of property being built, all demonstrate that it is the tangible things that will make a difference in our area.

Martin & Co Truro have more than 40 years' of experience lettings houses between the staff and if you would like any information on how we find you the best tenants for your property, call us on 01872 22 53 54.