The Chancellor of the Exchequer, George Osbourne, gave his Budget to Parliament on Wednesday 8 July 2015 and there were numerous factors that will have a telling impact on the UK property market. SellMyHome.co.uk gets under the bonnet of the summer budget to reveal the key topics which will inevitably have an affect on our industry...
Tax relief restriction for landlords: Osborne announced that there will be a cut on mortgage interest relief on buy-to-let property to align itself with the basic rate of income tax. It's hoped that this will help first-time buyers as buy-to-let landlords won't be able to claim repayments back from their income.
Tax relief for second mortgages to be abolished: As well as the tax relief restriction placed on buy-to-let landlords, the summer budget also introduces the abolishment of tax relief on second mortgages. The head of policy at RICS, Jeremy Blackburn, said that these changes would get "the heat out of the market".
Rents for social housing will be reduced by 1% for 4 years: Tenants in social housing will have their rents reduced by 1% until 2019. While this benefits tenants, this could ultimately cost the property industry, as the cuts will make it difficult to build more new homes.
Rent raised for higher earners in social housing: Tenants in social housing who have a household income of £40,000+ in London, or £30,000+ in the rest of the UK will have to pay market (or near market) rent.
£1million Inheritance Tax Allowance: The new rules on budgets mean that a property worth up to £1m can be left to a couple's children without them being charged inheritance tax.
ISAs: With the push on the help-to-buy-Isa in the last budget being forecast to begin in August, last week's budget has now pushed this back to December. The scheme allows first time buyers to put £12,000 into an Isa that will be topped up by £3000 by the government in order to help put down a deposit.
Tax credits will be limited to two children: Osborne announced that tax credits would be cut for families with more than two children as "the benefits system should not support lifestyles and rents that are not available to the taxpayers who pay for that system".
Transport in the North to be improved: £30million of funding will go into improving Northern transport, which should boost the North and potentially raise property prices.
New Greater Manchester Land Commission: The implementation of a new land commission will bring about a record of land that could be used for new housing.
And what we didn't learn….
Housing Supply: The budgets didn't outline what changes would be made to the UK's supply of houses, though reports show that with the impending social housing rent cuts, 14,000 fewer affordable homes could be built.
Main image by Lee Davy