New ISA could increase house prices further!

Posted On March 25, 2015 By mhauk

Robert Dowling, Head of the Property & Construction Sector at MHA, commented:

Help to Buy: ISA

One of the headline announcements of the 2015 Budget is the introduction of an ISA to support those saving to buy their first home.

The government has announced this ISA to help first time buyers to get on the housing ladder, although this policy is expected to mainly benefit those individuals that already have money or have wealthy parents.

The government will provide the bonus at the point the ISA is used to purchase a house with a value of up to £450,000 in London and up to £250,000 in other parts of the UK.

The bonus element will be at rate of £50 for each £200 saved.

A maximum initial deposit of £1,000 can be made into the ISA followed by a maximum monthly deposit of £200.

The saver will be able to able to withdraw the funds from the ISA at any point at the cost of reducing the bonus at the point of the property purchase.

Although this policy will be welcomed by house builders, the new ISA could push up house prices further.

Public Sector Land

 The government has announced that it has already sold surplus public sector land to enable 100,000 new homes to be built.

As part of the government’s Strategy 2020 it has also announced that it will release further surplus public sector land to allow a further 150,000 new homes between 2015 and 2020.

In an effort to tackle the housing supply problem in London, the 2015 Budget announces the creation of the London Land Commission and has also set aside £1 million to create a database of public sector and brownfield land.   Although this announcement is welcomed, it would have been helpful for the remit of the commission to consider the South-East too.

Capital Gains Tax on UK residential by non-residents

Whilst not announced in this Budget it mustn’t be forgotten that from 6 April 2015 non-UK resident individuals, trusts, personal representatives and narrowly controlled companies will be subject to Capital Gains Tax on gains.

Annual Tax on Enveloped Dwellings (‘ATED’)

 With effect from 6 April 2015 the existing ATED rules announced at Budget 2014 shall apply to residential enveloped properties with a value of more than £1 million.  Furthermore, from 6 April 2016 the ATED rules will also apply to residential properties over £500,000.

The ATED was originally designated a ‘mansion tax’ and affecting properties mainly in London, but the reduction to the ATED threshold to £1 million and then £500,000 will now be more likely to affect more modest enveloped property in the South-East and wider field across the UK.