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Article > Granny Tax Budget Could Help Property Investors

Article kindly provided by Mike Clarke


Last week saw the third coalition Government budget, and again the focus was centred on UK business growth. However, some of the extra investment and tax reduction measures announced by the Chancellor, George Osborne, could help boost the UK property market and Buy To Let investment in particular.

The Chancellor of the Exchequer made 10 statements that could affect buy-to-let property investors.

1. The Office for Budget Responsibility (OBR) has revised growth forecasts up to 0.8% this year, compared with 0.7% in November 2011 and 2% in 2013, but OBR are also sharply revising their forecast for Eurozone growth from 0.8% down to -0.3% and their forecast for world growth down by 0.2%.

If the growth rates are correct and the Eurozone runs slow compared to ourselves the outflow of foreign workers we have seen over the last couple of years will reverse. This is likely to see the demand for housing increase even more in 2013. Growth for any business is always welcome, especially if it is steady and buy-to-let investment is no exception.

2. Inflation will fall to 1.9% by next year.

This means that the Bank of England will not be under pressure to raise interest rates.

3. The Get Britain Building fund, providing up-front money for construction firms is being expanded.

This could help people buy their own homes. However, effects could be localised to certain areas of the UK.

4. A new £70m development fund will be set up for London, the Government will work with the Mayor of London to extend the Underground, lengthen commuter trains and look at new river crossings.

London already has a healthy rental property market; extra development and improved communications will further increase property values and PRS rents.

5. Improvements to rail services from Manchester by extending the electrification of the Trans-Pennine route between Manchester and Sheffield and further improvements to the train lines between Manchester and Preston, and Manchester and Blackpool

The improvement of busy commuter routes and communication structures will see outlying areas of the UK become more popular, increasing residential property values and PRS rents into the bargain.

6. There will be enhanced capital allowances for business start-ups in 3 new Scottish enterprise zones - Dundee, Irvine and Nigg and a Welsh enterprise zone to be created in Deeside.

More employment means more people needing to live in the area leading to increased demand for rental properties. Dundee has property prices starting at £30,000 and the average rent is £270 per calendar month. The area is already benefiting from a huge investment program and property investors are already seeing profits.

7. Tax changes to boost oil and gas extraction in North Sea, along with £3 Billion (GBP) "field allowance" to open up new oil fields off the coast of the Shetlands, in the North Sea.

Aberdeen has a very good property rental market already and increased investment will bring more employment leading to an increased demand for quality rental properties.

8. Corporation tax to be cut to 24% from next month, 1% more than previously announced with a target rate of 22% by 2014.

If your property investments are purchased by a limited company and profits are made there will be a reduction in tax of 8.33% chargeable by 2014.

9. A clamp down on stamp duty avoidance. The rate on properties worth more than £2 Million (GBP) purchased via limited companies will be raised to 15%.

For private individuals, Stamp duty will increase to 7% (up from 5%) on properties worth more than £2 Million (GBP). Most of the property market won't even notice this, but it could cause a slowdown of investments made by companies targeting this high end niche market. For private individuals an extra 2% on £2 Million (GBP) is a large increase.

10. Personal income tax limit will be raised to £9,205 from April 2013.

Disposable income should increase. If this happens the UK property market could see a lot more movement and the next property boom could begin. So, some encouraging news for property investors, the UK could be able to sustain recovery in the majority of the property market with further investment by the Government in new build properties and the banks being forced to improve lending.

So, is now a good time to buy property? OF COURSE IT IS!!!



About the Author

Mike Clarke

Mike is the director of MyProperty He has been investing since 2004 and owns property across the North West and the North East


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