Following on from my landlords tax post, the autumn Budget didn’t exactly deliver the good news we had perhaps hoped for. The Chancellor of the Exchequer, Philip Hammond has given very little in the way of help for property investors in Medway or anywhere really.
Anticipated waivers of Capital Gains Tax for landlords selling to first time buyer tenants, tax breaks and incentives for long-term tenancies, and reductions in stamp duty did not appear, resulting in yet more inward groans from many buy-to-let investors.
The concept that had been proposed for a capital gains tax break was an even split of the tax relief between landlord and tenant when the landlord sells to a long-term tenant. But it hasn’t come to fruition. Other tax reliefs might have been tightened if the policy had gone through – such as making wear and tear allowances conditional on long-term tenancies, reducing the private residence relief from an eighteen month grace period to six, and abolishing lettings relief entirely.
Lettings relief did come up though. Currently landlords who let a property that used to be their main residence, receive ‘lettings relief’ on the capital gains tax that must be paid when they eventually sell it. Well that’s being scrapped; from April 2020 it will only apply where the owner of the property is in shared occupancy with the tenant. Which is bad news for accidental landlords who will find themselves liable to capital gains tax (CGT).
What else? Well prior to Monday, there was talk of tax breaks for landlords offering longer-term (more than three) year tenancies. But that wasn’t mentioned at all. There was also a concerning lack of information about the implementation of the Tenant Fees Bill which was first mentioned more than two years ago. Agents, landlords and tenants deserve to know what the impact will be, when it will happen and how it will be implemented. But seemingly not in this Budget.
It was a highly anticipated Budget that delivered very little positive news for the property industry. The only good news is for large scale property developers and house builders who will benefit from an extension of the help to buy scheme for new build properties, which will continue to fuel the surging demand from first time buyers.
I’d like to know what investors views are now, after a couple of days to consider the budget. How will you move forward? One thing that is clear is that letting demand is strong, as are the tenant markets in Medway, but are the scales of profit measuring too lean to make investments viable? You can email at email@example.com, or contact me on LinkedIn or Facebook with your thoughts.