Highlight of the summer budget 2015
The most significant announcements from the July 2015 Budget for the prime central London property market were those related to non-doms, buy-to-let mortgages and inheritance tax.
Abolishing permanent non-dom status from April 2017 and making it impossible for this group to avoid inheritance tax will ensure that the market remains price sensitive. A reduction in tax relief to 20% on buy-to-let mortgages will see costs rise for these landlords, although not until 2017.
It is unclear, though, how this will affect prime London property. There will be lower yields as most markets will not absorb a rise in rents to compensate. However, over the longer term, buy-to-let investment still remains a ucrative option in prime central London.
The threshold for inheritance tax on all assets has been raised to £1 million for couples, to include a ‘family home allowance’. This is to encourage mature households to downsize. However, within our market the thresholds are unlikely to be high enough to stimulate the desired effect. This will ensure that supply remains constrained and will, therefore, help support price growth.
Date: 07/2015 | Source: Winkworth
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