Today was the first conservative budget since the party was elected and we’ve summarised the key items that affect the property market.
Goerge Osbournse confirmed plans to reduce the benefits cap to £23,000 in London and £20,000 in the rest of the country.
In a familiar theme echoing his earlier Budgets to help people wanting to buy their own homes and pass them on to loved ones when they die.
He announced plans to curb tax breaks for buy-to-let landlords by restricting tax relief to the basic rate of income tax from 2017, aiming to create a more level playing field between those buying a home to let and those buying a home to live in.
There is some good news for homeowners as the tax-free Rent-A-Room limit has been upped from £4,200 to £7,500. The process of taking lodgers can help with mortgage payments and avoid repossession if facing tight financial issues.
High earners to lose the right to cheap council house rents
Subsidised rents for middle class families in council houses were targeted by George Osborne today, in a move saving taxpayers £250million a year.
Some 340,000 people earning over £30,000 a year will lose their right to enjoy cheap rents in housing association or local authority properties.
The subsidised-rent benefit which is worth an average of £3,500 per household will be cut for those earning more than £40,000 a year in London and £30,000 in the rest of England.
As of 2017 onwards, they will be forced to pay a market rent to housing associations and local authorities.
The move will hit nearly one in ten of all social tenants in England, including more than 40,000 who enjoy subsidised rents despite receiving a household income in excess of £50,000 a year.
Under current rules, tenants are protected from paying market rents up to a household income level of £60,000.
Treasury sources said that the money raised from the reform would be ‘put towards reducing the deficit and generate extra income for housing associations to reinvest in affordable housing’.
Mr Osborne said 9 per cent of all social tenants in England are now on higher incomes while enjoying the benefit of an average £3,500-a-year per household in reduced rent.
They include more than 40,000 with annual household incomes in excess of £50,000 and a further 300,000 with incomes over £30,000.
Inheritance tax threshold to rise to £1million for family homes
Families will not have to pay inheritance tax on homes worth up to £1million, under long-promised Conservative reforms.
Honouring a pledge announced eight years ago, George Osborne is to raise the theshold for couples to £1million.
All but the richest will now be able to pass on their homes to their children without a huge tax bill.
The Chancellor will also unveil provisions that many people who downsize will not lose out.
The change, which is expected to come into effect in 2017, will ensure that 94 per cent of families will pay no inheritance tax at all.
Inheritance tax is currently levied at 40 per cent on assets above £325,000 for a single person or £650,000 for a married couple.
This will increase that threshold to £500,000 for singletons and £1million for married couples.
The increased amount however will apply only to the value of the main home, and not to other sources of wealth.
Due to the threshold has stood still as property prices have risen it is affecting record numbers of families.
In March’s budget, Mr Osborne unveiled forecasts showing the number of estates hit was on course to almost double from 35,000 in 2014/15 to 64,000 to 2019/20.
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