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Latest London Property News – March 2016

Market Overview

A return to economic growth, high employment, rising disposable incomes and persistently low interest rates are expected to keep house prices rising.Property information portal Rightmove reported a fall in asking prices of 4.9 per cent in Westminster, whilst instructions in Kensington & Chelsea saw an increase of 7.4 per cent year on year. New sales instructions in London have rebounded in the usual fashion after the festive recess with a large increase in asking price of 5.4 per cent this month, exacerbated by owners of more expensive properties now coming to market. Interestingly in the wider UK market there has been a reported 5 per cent uplift in new properties coming to the market compared to same time last year resulting in the highest total number of newly-listed properties at this time of year since the 2008 credit crunch.

SDLT, Buy-to-Let Investors and Tenants

April’s Stamp Duty changes will take some of the heat out of this part of the market. As predicted the losers will be tenants as we expect the number of buy-to-let investors to fall. Research carried out by the Centre for Economics and Business Research (Cebr) estimated, that in ten years’ time, deposits in London are projected to rise to £2,733, which would amount to 120 per cent of the predicted monthly salary of £2,281. Landlords with more than 15 properties had been expecting to escape the three per cent Stamp Duty surcharge on buy-to-let homes. But the chancellor instead declared that all buyers of additional homes will be subject to the levy, due to come into effect on 1st April 2016.
SDLT, Buy-to-Let Investors and Tenants

The Budget – key points for the Property Industry

The Government has confirmed the three per cent increase in the rate of Stamp Duty on buy-to-let and second homes from 1st April 2016.

New Stamp Duty rates for Commercial Property

  • New Stamp Duty Land Tax (SDLT) on commercial property is changing to the ‘slice’ system: 0 per cent up to £150,000, 2 per cent on next £100,000, 5 per cent on consideration over £250,000.
  • New 2 per cent rate for high-value leases with net present value above £5,000,000.
  • Buyers of commercial property worth up to £1,050,000 will pay less in Stamp Duty.
  • Effective from 17th March 2016.
  • Stamp Duty rates for leasehold rent transactions will also change, with a new 2 per cent Stamp Duty rate on leases with a net present value over £5,000,000.

Capital Gains Tax

  • From April 2016, the higher rate of Capital Gains Tax will be cut from 28 per cent to 20 per cent and the basic rate from 18 per cent to 10 per cent.
  • There will be an additional 8 percentage point surcharge to be paid on residential property and carried interest.
  • Capital Gains Tax on residential property does not apply to your main home, only to additional properties.
  • Effective from 6th April 2016.

Corporation Tax

  • Headline rate of corporation tax – currently 20 per cent – to fall to 17 per cent by 2020
  • Will benefit over 1,000,000 businesses
Nicholas Jaffray comments: “By not giving Stamp Duty exemption to institutional private rental investors we expect this sector to slow down. Although purchases of 6 or more residential properties will now qualify as a commercial transaction, the costs will still apply one way or another with the new commercial Stamp Duty reform.” Have a look at our new Stamp Duty Calculator Tool and calculate your liability on the property you wish to buy.
Corporation Tax

Crossrail – The ‘Lizzie’ Line

House prices along the Elizabeth line have been tipped to increase by 3.3 per cent per year until the route launches in 2018/19. Woolwich has sparked a lot of interest with 163 new homes being built within a 15-minute walk of the new station, and planning has been approved for 2,700 more. Prices in areas such as Abbey Wood in south-east London and Taplow to the west of London have soared by up to a third in 12 months, and new research suggests the gravy train may have plenty of steam for years to come.
  We wish you all a lovely Easter Bank Holiday weekend.. If you are considering buying property and would like to discuss this further please contact Nicholas Jaffray at: nicholas@jaffray-estates.co.uk and visit: www.jaffray-estates.co.uk for more information.
Elizabeth line
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