Fionnuala Earley, Research Director at Hamptons International, commented on tax on locked up and left property announced in today’s Budget:
“In an attempt to penalise buyers using companies to purchase property that they lock up and leave, the Chancellor has extended the higher stamp duty and annual tax to property valued above £500,000. The bigger disincentive to leaving a property unoccupied is the imposition of the Annual Tax on Enveloped Dwellings (ATED) on property purchases above £500,000. Those in the £1 million to £2 million bracket will face an annual charge of £7,000 and those in the £500,000 to £1 million band £3,500.
The effect of the changes are unlikely to be huge in terms of market activity, but even if it does discourage company purchases of property that would be left empty, that’s not necessarily a bad thing. Leaving stock for residential purchase or encouraging company owners to rent out their property will help to make homes available for living in. Although at a threshold of £500,000 potential tenants are likely to be able to afford to buy their own property so it will do little to help increase the supply of affordable homes to rent. The Treasury is also likely to have another motive; ATED raised five times more than was expected on properties over £2million since its introduction so moving the threshold lower is clearly an attraction for greater revenue too.
Nick Vaughan, Head of Residential Development and Investment at Hamptons International, commented on the measures announced in today’s Budget which impact the housing market: “It’s clear from today’s Budget that the UK housing market and current shortage of homes is high on the Government’s agenda.
“Extending the Help to Buy Equity Loan scheme to 2020 will provide the biggest boost to the UK’s housing market of all the measures announced today. As well as getting more people onto the housing ladder, Help to Buy is helping to increase the underlying confidence in the market.
“While the new garden city in Ebbsfleet will create housing and jobs and is a step in the right direction to address the shortage of homes, we firmly believe the key to unlocking long term growth and delivering new homes targets is through planning reform.”
For media enquiries please contact:
Aisling Gray, Senior PR Manager, Hamptons International
020 7758 8422 / 07786 118634 / firstname.lastname@example.org