There may be trouble ahead
The Stamp Duty Land Tax amendments in George Osbourne’s 2014 Autumn Statement caused an unprecedented frenzy to rush through the sale of high value properties, particularly in London and the South East. The new rules meant that there would be significant increases in Stamp Duty for properties exchanging for more than £937,000. As the change came into force on midnight of the Statement Announcement, solicitors had to burn the midnight oil to ensure contracts were exchanged before the midnight deadline. There were reports that Solicitors were being offered handsome success fees, some in the region of £10,000 to ensure exchange contracts got finished on time.
It is too early to call what effect this Stamp Duty reform will have on the property market and the UK economy in general. Some say it will kick start the value of the first time buyers’ market, pushing prices up due to the reduced Stamp Duty rates in this sector, although with a consequence of pushing more and more people into the rental market. There are others who think the property market will plateau off irrespective of this in the coming years anyway.
2015 could be another year of dramatic changes in property taxes. So what could have us making a beeline to our local solicitor this year to push through that property contract exchange?
Capital Gains Tax for Non-UK resident property owners
Non-UK resident owners of UK residential property, may for the first time be liable to pay Capital Gains Tax if they sell that property after 6 April 2015.
Again, some experts believe we will witness another rush to sell London based properties ahead of this April date. There are significant foreign property owners in the top-end London market, so will this push house prices down?
The property market ultimately reflects the well-being and financial security of our Nation. With the coming 7th May General Election being a hard one to call at this time, it is likely that this uncertainty may potentially dampen the UK housing market until the new government is known.
Many homeowners with properties valued at more than £2 million are concerned about the Labour Party’s proposal to introduce a Mansion Tax.
Labour’s Shadow Chancellor Ed Balls has proposed an annual fee which owners of homes worth over £2M would pay. On 20 October 2014, he published details of the Mansion Tax. He confirmed properties valued between £2M and £3M would pay £3,000 per annum, but properties over £3M would pay considerably more.
This policy has been criticised, particular the unfairness of taxing pensioners owning high value properties. At this stage it is not known what the final policy plans are for the Mansion Tax.
The introduction of the Mansion Tax could however create a buyers’ market. With buyers able to drive property prices down to around the £2M mark and get prices below the threshold.
The Bank of England Base Interest Rate has remained unchanged at 0.5% since 2009.
The Bank of England have stated that there will be small and gradual rate rises in the coming future. When this happens simply depends on the stability of the UK Market and economy. With the uncertainty of the 2015 General Election, some will not be surprised if we again end the year with interest rates at the current record low rate of 0.5%. However, nothing is set in stone when the rates will actually rise.
Can we ever predict the future?
2015 may be a turbulent year for the UK property market in terms of the General Election, changes to Capital Gains Tax rules, potential interest rates changes and new government policies. However, predictions as to what the actual property market will do will always be thrown out by unexpected events.
There will always be winners and losers in the property market. Only time will tell what all these effects will be.Talk to Barnes Roffe today