Stamp Duty Increase On Second Homes
Effective immediately, the surcharge on second homes and investment properties has risen from 3% to 5%.
The Impact
This increase will raise the cost of acquiring additional properties, possibly reducing demand slightly in the purchasing of new HMOs/residential properties. However, for those that choose to still invest this could lead to slightly lower prices and less demand per property..
Capital Gains Tax (CGT):
The higher rate of CGT has increased to 24% from 20%, with the lower rate going up to 18%. This adjustment affects gains from the sale of properties not classified as primary residences.
The Impact
The volume of properties on the market, particularly investment properties, may see a slight slowdown. However, since the CGT hike was lower than initially expected, it may not pose as significant a supply issue as previously anticipated.
Energy Efficiency and EPC Standards:
The government has reaffirmed its commitment to boosting the energy efficiency of rental properties. Under the "Warm Homes Plan," new grants and incentives will support landlords in upgrading properties to meet the required Energy Performance Certificate (EPC) rating of C by 2030.The scheme provides full funding for the first property a landlord upgrades, with a 50% cost-sharing requirement for any additional properties. It covers up to £15,000 per property for improvements like insulation and double glazing, and an additional £15,000 for low-carbon heating installations.
In essence, make sure your prioritise the property that needs the most work ha!
Pension Tax Relief Changes
Property investors who use pensions to fund their investments may see a shift, as the government is considering a flat tax relief rate. This change could affect high-earners, potentially decreasing the tax efficiency of investing pension funds into property.The budget didn’t introduce a flat rate for pension relief but it included strong indications that the reform will likely take place. A flat rate, potentially around 30%, is being discussed as a fairer alternative.
Article from Kendal Bailey HMO Property Management
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