The new Budget revealed yesterday by Chancellor of the Exchequer, Rishi Sunak, has a number of key implications for people buying and selling homes in Leeds, as well as landlords.
Here is a brief rundown of what these latest Budget changes might mean for you:
1. Stamp Duty
- The chancellor announced that the up-to-£500,000 “nil-rate band” for stamp duty will finish at the end of June, rather than the end of March, as originally planned.
- Until 30 June 2021, no Stamp Duty will be charged on a residential property bought for up to £500,000. This covers the majority of houses and flats in the UK.
- Until 30 September 2021, no Stamp Duty will be charged on a residential property bought for up to £250,000.
As a result of this extension, the market will be extremely buoyant this summer, all the way through to September. Now is a great time to buy property and save SDLT (Stamp Duty Land Tax) on your purchase.
However, property prices are on the up as demand soars. There has been a significant appetite for sales properties across Leeds as well as a surge in rental demand. Research shows that there are now 16 buyers chasing every available property, partly driven by the Stamp Duty relief, as well as buyers’ re-assessing their property needs to better accommodate changing lifestyles.
If you are selling your property, now is a great time to do so, as the cuts to SDLT has ensured that property sales have continued at a very fast pace, as well as increasing sales values within a short space of time.
With the zero-rated Stamp Duty limit extended to £250k until the end of September, and the average Leeds house price being £220k, it means that thousands of people can benefit from this incentive across Leeds until September – particularly first and second-time buyers.
Mr Sunak also announced that first-time buyers will get a Mortgage Guarantee by the Government, which means that people buying homes will be able to borrow 95% of the value of their home. This scheme is designed to help more buyers onto the housing ladder. Many big lenders are already backing the scheme, according to the chancellor. Lenders will be incentivised to provide mortgages to first-time buyers, and existing homeowners, with just 5% deposits, to purchase properties worth up to £600,000.
Mortgages with 5% deposits have been mostly removed by the banks during the pandemic while most lenders have tightened their lending criteria, making it more difficult for first-time buyers to purchase a property. This new Mortgage Guarantee Scheme will further stimulate the housing market, get more younger people onto the housing ladder, and increase property transactions. One focus of this scheme is to turn more renters into first-time buyers.
We will see a number of our Landlords selling their BTL properties, and a lot of the purchasers will be first-time buyers, making use of the new Mortgage Guarantee Scheme in Leeds. This scheme, coupled with the Stamp Duty Extension, is sure to make the sales property market even more buoyant.
3. Corporation Tax
A number of our landlords have set up limited companies for their BTL properties and will be frustrated that the rate of Corporation Tax is set to rise to 25% in 2023, but there will be some protections for smaller businesses. The good news is that smaller businesses, including many property investors, will benefit from a Small Profits Rate of just 19%, for profits less than £50,000 per year.
4. Capital Gains Tax
There was concern amongst landlords that Capital Gains Tax was going to be increased during this Budget, however there was no mention of this. Many suspect that this may be announced at a later stage, but for now, this will give property owners some temporary relief.
If you are considering selling your BTL investment, contact our friendly sales team for a valuation of your property. Alternatively, if you are looking to take advantage of the Stamp Duty relief and add a property to your portfolio, take a look at our latest properties for sale.
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