The Buy-to-Let Budget 2011
Latest Landlord News by: Madalena Penny
The Chancellor yesterday showed his commitment to the private rented sector through new plans to remove restrictions and barriers from private investment and directing it towards similar tenures as seen in Europe.
What appears to be the coalition’s drive to address the housing crisis in the UK has come as a welcome if not surprising addition to this week’s budget. By identifying the buy-to-let sector as the nation’s strongest asset at resolving the growing housing shortage, Mr. Osbourne’s announcements this Wednesday will no doubt make the sector a lot more attractive to investors.
Proposing changes surrounding stamp duty on the purchase of multiple properties could unlock £7.5bn of investment according to CB Richard Ellis. Traditionally, the way stamp duty was calculated deterred investors from building large portfolios. The Chancellor’s proposed changes to this would allow investors buying more than one property the means of paying stamp duty based on the average price of individual properties purchased at the same time and not the total transaction cost.
In addition to this, George Osborne has also announced plans to the Real Estate Investment Trusts (REITS) by scrapping restrictions that have deterred residential investors from both the larger private sector investors and the smaller private residential landlords by scrapping the 2% entry charge applied to applicants of a Real Estate Investment Trust and will in turn benefit smaller landlords through tax breaks on capital gains tax.
Industry leaders and experts have welcomed the proposed budget changes. Sim Sekhon, senior partner at landlord network, ‘Legal 4 Landlords’ welcomed the news. “ This is excellent news for the sector. The changes to the stamp duty will attract more investment into the sector and in turn create further private housing, alleviating some of the tenant-demand the UK is currently experiencing.”
Liz Peace, chief executive of the BPF. (British property Foundation) said: “This is a budget that the property industry will want to get behind. It has a general thread that is supportive of enterprise and a number of issues on which our industry can genuinely feel it is being supported”.
James Rowlands, global policy and research manager for the Royal Institute of Chartered Surveyors (RICS), said: “More people are now choosing to rent their home, particularly young professionals and those who are looking for flexible accommodation. Changes to REITs and stamp duty will help encourage large investors including pension funds into the sector providing a step change in how rented homes are supplied. Changes to these systems will lead to more high quality properties which are a genuine alternative to owning a home”.
The Chancellor also announced a £250m fund allocated for first-time-buyers, offering them interest free loans of up to 20% of the value of the property along with measures allowing the auction of public sector land, and the conversion of offices into homes without the need for planning permission.
