LONDON, June 23 /PRNewswire/ -- The UK's emergency budget has turned out to be much less threatening than expected for international and domestic investors in London's residential market -- and may even provide an indirect long-term boost for the private flat and house rentals sector.
These key points are why Benham and Reeves Residential Lettings remain upbeat:
- Capital Gains Tax for higher income earners rises to 28% from 23 June. This is much better than the 40% and 50% predictions, and its immediacy avoids a spike in sales (and thus falling prices) in the period leading up to implementation. In effect, this takes us back to roughly pre-2008 CGT levels;
- No CGT 'taper relief'. This is disappointing but it is a cloud with a silver lining. Some long-term investors will be deterred by not having CGT falling with the duration of their ownership; that deterrent may lead over some years to a reduced supply of lettings stock to meet demand, with upward pressure on rents as a result;
- Higher VAT level not introduced until January 1, 2011. This gives a useful period for landlords to implement renovation or redecoration programmes for their units before the 20% rate is introduced in the New Year;
- The 25% reduction in the budget of the Department of Communities and Local Government over the next four years throws into doubt a large number of housing projects, exacerbating the shortage of new homes. This indirectly boosts demand for private rented sector properties by those unable to afford or find social-sector homes to buy or rent;
- Confirmation that Holiday Lettings Tax Relief will not be withdrawn. This is buried in the budget but is important to those investors whose portfolios included holiday lettings. The last government's threat to stop landlords writing off improvement work against tax has now been buried.
"Although many individuals may feel worse off than before due to tax or spending changes, the Budget has been relatively benign for the housing market. Investors in London property have specific reasons to be optimistic as the most severe effects of the public spending cuts will be felt in the Midlands and north, not in London," says Anita Mehra, Managing Director of Benham and Reeves Residential Lettings, a London-based rentals agency with ten London lettings offices.
"With no dramatic increase in stock availability through forced sales, capital values will remain steady, thus suggesting that the current difficulties for first time buyers will remain -- a fact which inevitably boosts the private rented sector," says Anita.
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With 10 offices in the prime residential areas of London (and overseas offices in Singapore, Hong Kong, Dubai and India), Benham and Reeves Residential Lettings is recognised as London's largest, independent lettings-only agency. They are also one of the only lettings agents to offer an interior design, refurbishment and furnishing service for investment properties through their sister company In:Style Direct.
The company is part of established property group, The Complete Property Investment Solution, which offers a complete range of services to help clients maximise their return on investment. With a leading sales and acquisition agent, interior designer and furnishing company within the group, The Complete Property Investment Solution can manage all aspects of property investment.
SOURCE Benham and Reeves Residential Lettings