RLA News Service

The Residential Landlords Association welcomes Government measures to support growth in the private rented sector which it says will help encourage greater investment to meet increased demand.

We particularly welcome changes to stamp duty which will in future allow buyers to opt to pay the rate determined by the average value of multiple dwellings purchased at the same time rather than on individual properties.

Key headlines likely to be of interest to landlords include:

• Spending on Housing and the Environment will be £24 billion in 2011-12.

Stamp Duty

• The Government will introduce changes to the Stamp Duty Land Tax (SDLT) rules for bulk purchases of residential properties. If the buyer chooses, the rate of SDLT on purchases of multiple residential properties will be determined by the mean value of the dwellings purchased (subject to a minimum rate of 1%), rather than their aggregate value as is currently the case.
• An announcement on the outcome of the Government’s review of the stamp duty land tax relief for first time buyers will be published in autumn 2011.
• Real Estate Investment Trusts will be made easier to establish and more accessible to investors. This is aimed at encouraging investment in the private rented sector over the longer term.
• The Government will introduce legislation, with effect from 24 March 2011, to address three SDLT avoidance risks. The changes cover avoidance techniques that use the subsales rules, the Alternative Finance reliefs and the rules for exchanges of land. These techniques have been used to attempt to avoid tax on both residential and non-residential property transactions, including on high value property transactions.

Housing

As part of efforts to support those looking to own a property and growth in the housing sector, the Budget announces:

• Homeowners facing difficulties in keeping up with mortgage payments will be supported by extending for a further year temporary changes to the Support for Mortgage Interest (SMI) scheme. The 13-week waiting period and £200,000 limit on eligible mortgage capital will now remain in force for new working age SMI claimants until January 2013.
• £250 million will be provided to support first time buyers to purchase a new-build property. The FirstBuy programme will assist over 10,000 households with equity investments jointly funded with house-builders.

Benefits

• The budget has confirmed that the Government will not now proceed with the planned 10% reduction for those in receipt of Housing Benefits who are also long term JSA claimants.
• As announced in the June 2010 Budget, LHA rates will be set at the 30th percentile of local market rents and LHA rates will be capped at £250 per week for a one bedroom property, £290 per week for a two bedroom property, £340 per week for a three bedroom property and £400 per week for four bedrooms or more. As announced by DWP in November 2010, these measures will now come into effect from April 2011 for new claimants, and January 2012 for existing claimants.

Taxation

• Based on the recommendations of the Office of Tax Simplification’s (OTS) review of tax reliefs, and continuing work by HMRC, the Government intends to abolish 43 tax reliefs whose rationale is no longer valid.
• From April 2011, new tax rules for Furnished Holiday Lets (FHL) will take effect, so that loss relief may only be offset against income from the same FHL business. Letting and availability thresholds will be increased from April 2012.
• The annual exempt amount for capital gains tax will increase in line with statutory indexation to £10,600, with effect from 6 April 2011. The Government will simplify the process for setting the exempt amount for years where indexation does not require an increase. From April 2012 the CPI will be used as the default indexation assumption for capital gains tax annual exempt amounts.
• From 6 April 2011, the Government will increase to £10 million the lifetime limit on capital gains qualifying for entrepreneurs’ relief.
• Following changes to the underlying EU legislation, the Government will restore entitlements under the EU Single Payment Scheme to the list of assets that qualify for capital gains tax roll-over relief.

Green Deal

• The Government has committed itself to the success of the Green Deal and will act to encourage and incentivise take-up so that the Green Deal will appeal to households, business and prospective providers alike, before it is introduced in 2012.