Having heard the Spring Budget, you’d be forgiven for wondering what on earth happened to ‘fixing our broken housing market’, which was declared as a major policy push by the new cabinet in its white paper, launched in February.
Housing, which has taken centre stage at each budget over the last few years, was reduced to a few lines on a spreadsheet. And the couple of mentions it did get was only in the context of what had already been announced in previous budgets.
But while you might think there’s nothing for you to take away from it as a landlord, there’s actually plenty in there that could affect you. Now that we have an overarching housing strategy in place and some news about personal finance and property in the Spring Budget, here are five key things you need to check:
What’s your net income going to be?
With changes to mortgage finance, loss of an automatic deduction for wear and tear, changes to the personal allowance (rising to £11,500 for most people in the next tax year) and planned changes to dividends and national insurance (for some), it’s essential to know how those things are going to impact – positively or negatively – on your net income.
Can your main home be taken out of inheritance tax?
One change that hasn’t been talked about very much is the opportunity to ‘take the family home’ out of inheritance tax, which was announced by the previous chancellor, George Osborne, in 2015. If you your estate includes your main home and this takes you over the £325,000 threshold, then more relief is potentially available when that home is passed ‘on death to a direct descendant’.
To find out whether this extra relief might be available to you, contact your property tax or wealth advisor.
The changes you need to make to the way you account for your property income
There are changes afoot around the way that landlords account for their property income. It affects people that earn less than £1,000 from property income as you may not need to declare the income/tax at all and also those that earn more than £10,000 overall.
For those that earn over £10,000, this is chiefly down to a new government initiative called ‘Making Tax Digital’, which is part of the Government’s bigger plan to keep tabs on tax returns. Over time, it is expected to make the tax you have to pay visible at any time, potentially ending the ‘annual tax return’ for both individuals and businesses.
As a result, it’s expected that landlords will have to file their accounts on a quarterly basis under the new system.
For more information, talk to your local Belvoir office or your accountant, or click here for Government advice.
Is there a ‘build to rent’ scheme in your area?
The one area of the Private Rented Sector that is being well supported by the Government is large-scale Build to Rent schemes, aimed at providing long-term rental solutions for tenants. The British Property Federation has, helpfully, plotted some of the schemes on an interactive map.
The reason it’s important to track what’s happening to this and other schemes from Housing Associations and Local Councils, is that more incentives to build more properties can make it more difficult for you to rent your property at certain times. As such, it’s worth checking what’s happening locally so that you can try to ensure your property is tenanted before, for example, 50+ brand new, purpose built properties (normally flats) become available for rent.
Can you benefit from local or national infrastructure investment?
Something positive it would be easy to have missed from recent budgets is the huge infrastructure investment changes planned and the potential opportunities they open up for investors, albeit these tend to be longer-term (20+ years).
For example, the new HS2 has finally been given the go ahead and Heathrow airport is expanding. Then there’s the ‘Midlands Engine’, the Cambridge-Milton Keynes-Oxford corridor and the Northern Power House – all presenting potentially excellent opportunities for both letting and securing capital growth.
In an interesting turn of events, the Chancellor decided after the budget to make his first U-turn and axed the proposed National Insurance tax hike.
To find out more about what’s happening in your area that could create property investment opportunities, do speak to your buy to let trained, local Belvoir office.
