Buy-to-Let on Naughty Step, Commercial property ‘Teacher’s Pet’

March 16, 2016

What has George Osborne’s 2016 Budget done for property? Given how unsurprising this budget was expected to be, there have been an awful lot of surprises. Themed as the Budget for the ‘Next Generation’, there were a considerable amount of property-related announcements by George Osborne.

Northern Powerhouses: Manchester, Liverpool, Leeds

The dual announcements of the Devolution of power to the Northern Liver Building-Liverpool City InvestmentPowerhouses such as: Manchester, Liverpool and Leeds, with infrastructure improvements like the commissioning of the North-South HS2 and HS3 joining Manchester with Leeds, mean that the North of England is more accessible. As a side-effect, this should provide a fillip to the housing markets and spread capital growth more evenly across the country, rather than just the South-East.

Lifetime ISA for property and pensions

The announcement of the Lifetime ISA, attracting a 25% government bonus for the under 40s will provide many with a more tangible means to get onto the property ladder, at a time when there are big fears of being locked out of the property market. Given the Lifetime ISA is also intended to help pension provision, this could give a boost to overseas property investments, which start at more accessible prices in many markets, like Poland or Spain, compared with the UK.

Property Tax Breaks

The reduction in Capital Gains Tax from 28% to 20% is welcome for property investors, when they come to exit and sell investment property this will help reduce tax bills. However the Chancellor continues his tax raid on Residential Property, by excluding it. This means, yet again it is commercial property which wins, given they could pay up to 8% less in tax at the point of sale.

Commercial property vs buy-to-let

Whilst Buy-to-Let has been on the ‘Naughty Step’, commercial property seems to be ‘Teacher’s Pet’. Previous controversial announcements of drastic buy-to-let taxes remained untouched, whilst George Osborne announced a reduction in Stamp Duty at the lower price bracket for commercial property transactions. This could give a boost for Purpose-Built Student Accommodation investments (PBSA) which are a commercial investment and provide a serious alternative for investors moving away from buy-to-let.

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