The Summer Budget delivered by George Osborne last month contained two substantive policies relating to the UK housing market. Firstly, the raising of the inheritance tax threshold for property by &175,000 per person, means that a couple can bequeath their family home to their children or grandchildren without any tax due up to &1,000,000 (after the mortgage). Secondly, there is to be a phased approach to reducing tax relief for Buy to Let landlords. Landlords who claim relief on their mortgage interest payments will only be able to do so at the basic rate of tax from 2017 (phased in over four years).
Hunters Managing Director Glynis Frew was quick to offer her comments and said, “We welcome the Chancellor’s new inheritance tax thresholds, the last election taught us that home ownership is very important to the nation and when people have worked hard to own a residence and have already paid taxes they should be able to pass this onto their children tax-free."
“Despite a phased approach, we were disappointed to hear of the reduction in tax breaks for Buy to Let investors as this will discourage new landlords from entering the sector and will result in a lack of stock. This will inevitably lead to higher rents as at the end of the day landlords are business people and will need to compensate for this.”