The roadmap out of lockdown laid out by Boris Johnson earlier this week has provided some hope and optimism, but this must obviously be met with caution as we know all too well that everything is subject to change.
In the midst of this, on 3rd March the Chancellor, Rishi Sunak, will deliver his Spring Budget and is facing an almost impossible task. He must continue to support those impacted by the pandemic, whilst trying to start reclaiming the national debt and encourage consumer spending!
As we have said before, the property market has not only been fortunate enough to continue operating throughout much of the pandemic, but it was also given a significant boost in July with the announcement of the Stamp Duty holiday on properties up to the value of £500,000.
Whilst this has been extremely positive for thousands of people, with many calling on the Government to extend the stamp duty holiday, personally I feel the quicker the Chancellor stops it the better. The Stamp Duty holiday combined with continuous furlough is creating a false sense of security and delaying the inevitable collapse in the lower and middle housing market. Once furlough ends and the unavoidable increase in unemployment starts to bite, we are going to more people struggling to meet their mortgage payments. This will lead to a catastrophic housing slump.
Whilst delaying until June would help more of those existing transactions over the line, without scrapping Stamp Duty up to £500,000 indefinitely, it is still likely the brakes on the housing market will start to be applied.
However, for many, Stamp Duty should not be of top priority and a key focus should be further support for victims of unsafe cladding. The Government recently announced a further £3.5 billion towards the cladding scandal but critics say the issue will require far more to remove and repair all of the buildings affected by unsafe cladding.
In relation to landlords, popularity in buy-to-let has waned over the last few years since the Government introduced a 3 per cent surcharge on Stamp Duty, scrapped higher-rate tax relief and reduced “wear and tear” allowance. Now with tenants looking for more space and fleeing city centre locations, coupled with the possibility that Rishi Sunak could increase capital gains tax (CGT) next week, more landlords are considering exiting the market.
Currently, higher or additional rate taxpayers pay 28 per cent on gains when selling an investment property, while basic rate taxpayers have to pay 18 per cent. If these are increased in line with income tax, higher or additional rate taxpayers would pay 40 or 45 per cent CGT respectively, while basic-rate taxpayers will pay 20 per cent.
There is speculation that the Chancellor’s initial focus will be on COVID-19 recovery and therefore it’s possible that the property market may escape any major raids, but it is inevitable that the debts must be repaid somehow, someway, so it is only a matter of time.
If you are looking to sell your home or an investment property quickly, WeBuyProperty will be happy to have an informal chat and offer a no-obligation valuation on your property for a quick sale.
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