Following the announcement of the highly anticipated 2014 annual budget last night, certain aspects of taxes regarding housing are now set to change. Chancellor George Osborne indicated that the government has decided to increase the threshold of taxation on UK properties, mainly in a bid to restrict the wealthy foreign buyers who avoid paying appropriate taxes by purchasing British houses through company structures
The property industry has been one of the main focal points for discussion within the cabinet recently, due to a sharp increase in the demand for houses among many British buyers following the economic recovery. This influx of property buyers has led experts to forecast a busy remainder of 2014; especially for companies that are operating within the housing industry. It is inevitable that such favourable economic conditions will majorly attract wealthy foreign investors, and, to no surprise, overseas buyers have already started using their finances to stake a claim to expensive British properties.
However, it has become apparent that some of these foreign property buyers are taking advantage of a loophole within the buying system; namely by using corporate structures as a way of avoiding full tax payment. The previous law stated that any house worth above £2 million (bought through a company) required a stamp duty payment of 15% of the property’s price. Now, the government has reduced the threshold of stamp duty payment down for houses that are worth £500,000.
This rule favours those who buy and let their properties, as George Osborne indicated that ‘homes rented out are exempt from this measure’. The main reason behind this is to reduce the number of properties bought in the capital by wealthy owners, who are often then in the habit of simply leaving them empty. The demand for high-end properties is still on the rise despite such legislations being implemented.
As an experienced company, we at Prideview Properties certainly expect a very busy remainder of the year, and hope that the property industry will carry on flourishing in both the residential and commercial housing sectors. However, the budget reflects that the commercial property market will perform better as the stamp duty tax is lower therefore, as an experienced company, we advice investors to approach us at Prideview Properties. We are Commercial Property Agents in London who are always available to share our rich knowledge of the property industry.