Post-budget thoughts and evidence of recent prosperous property auction action

Post-budget thoughts and evidence of recent prosperous property auction action

 

George Osborne’s eighth budget, delivered on Wednesday, contained a few small surprises but nothing too challenging. Rather, it was a bit of a political budget where the Chancellor tried to move a few things about to ensure he hits his fiscal goals by 2020 with a few comments on his views on the importance of remaining in the European Union thrown in for good measure.

From a property investor’s perspective it must feel though, that they are being targeted as the group with the ‘broad shoulders’. In the previous Budget it was through Stamp Duty and this time owners of more than one property will not receive the Capital gains Tax reduction that other types of investors will. For all investors excluding property the higher capital gains tax rate has been cut from 28% to 20% while the basic rate has fallen to 10% from 18%.

Indeed, there are some views that this move could dissuade property investors from selling their investments due to the higher taxes they will have to pay on any increase in the value of that property. If fewer homes are put up for sale that could well serve to push the value of homes that are on the market even higher than they are currently and quickly.

As with many things, only time will tell. But hopefully this new policy won’t lead to another significant drop in property for sale and the prospect of property bubble…

With regards to the Stamp duty changes which come into play on April 1st this year, the latest property auction figures from the Essential Information Group (EIG) show that February proved a
bumper month. The total number of lots for sale at auction in February was 4,450 a 16% increase from the same time a year earlier when there were 3,831. There was also a 16% rise in the number of lots sold: in February 2015 2,995 property lots were sold at auction, this surged to 3,472 this year.

EIG managing director David Sandeman said: “Our records show these to be the highest numbers ever recorded in the month of February – beating the previous highs of 4,412 lots offered and 3,430 lots sold in February 2007.” He also said in the EIG newsletter that activity was likely boosted by people making final purchases ahead of the stamp duty changes in April. “I expect things may begin to settle down now, as time runs out for buyers wanting to complete their transaction before the 1st April.”

While that may be true, what this uptick in property auction activity has proved is that it’s a great way to make a quick, fuss-free property purchase when you need to!

 

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