Blog Post

As A Landlord How Will The Budget Affect Me?

Ian Watson Apr 7, 2016, 12:27 PM

In the wake of every budget, people and businesses need to review what has been said, what will change and what impact it will have on them. This is definitely the case for landlords, who have been on the receiving end of some harsh decisions and policies in recent budgets, and the March 2016 budget is no different.

A quick scan of the “winners and losers” reviews across a range of media outlets points out that many people believe that landlords will lose out in the aftermath of the 2016 budget. This is bad news for the industry, and individuals will need to review their rental yield and determine if being a landlord is worth the time and effort.

This is a decision that many individuals will have to make, and there are still many positive reasons to serve as a landlord but the 2016 budget has raised a few issues that many people are unhappy with.

Landlords face a Capital Gains Tax surcharge when selling property

When the chancellor announced that he was cutting Capital Gains Tax (from 18% to 10% for basic rate payers, and from 28% to 20% for higher rate payers), there was a sense of positivity about this change, but this news was followed up with the announcement that this change would not be available for residential property sales. This means any landlord selling their home will still be subjected to the 28% or 18% rate, depending on their tax bracket.

While some quarters have tried to point out that landlords will be no worse off because of this decision, the relevant rate stays at the same as it was before the Budget, there is no doubt that landlords can feel aggrieved and hard-done by with this decision. When other people get access to a benefit and you don’t, it will feel like a personal attack.

Some quarters may say that the relevant rate for landlords selling their property has stayed the same but in comparison to the Capital Gains Tax for many other people, landlords have been hit with an 8% surcharge.

Landlords face a Stamp Duty surcharge when buying property

Another blow for landlords came with confirmation and clarification about the 3% surcharge being imposed on stamp duty for landlords and investor buying property from April 2016.

Previously it was believed that investors with a large property portfolio may be exempt from the new stamp duty charges but this was denied by the Chancellor at the most recent budget. This will lead to landlords having to pay considerably more money when buying a property. As an example, a £250,000 property would incur a £2,500 stamp duty charge before the new surcharge but after, the same property at the same price would incur a stamp duty charge of £8,800.

The change in stamp duty is expected to raise £1bn for the Treasury by 2020, while the government claims it will provide a greater opportunity for first time buyers to afford and buy a property. With the mortgage tax relief changes also due to come into effect from April 2017, it is understandable that many landlords feel as though they have been singled out by the Chancellor and the government.

There are other aspects of the Budget which may impact on people’s disposable income while positive noises about the HS3 link between Manchester and Leeds may impact on the Manchester property market, but on the whole, landlords will feel that the March 2016 budget brought them nothing but bad news.


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