05 Dec Autumn Statement: Phew! What a relief
Instant reaction on what the Chancellor’s Statement means for HNWs and the prime property sector from Trevor Abrahmsohn… No new tax on property – phew, what a relief! Common sense has, after all, prevailed. Thank goodness for small mercies.
Mansion tax was avoided and so was extending the bands on Council Tax. If imposed this could have had the most devastating effect on the residential property market that is in a delicate state at the moment with liquidity reduced significantly from the changes to Stamp Duty in the Spring Budget of 2012.
The Chancellor re-iterated that the 50% tax rate raised less than a few pennies as wealthy people substantially reduced their salaries from £1million.
With pensions under further threat and attack by the Chancellor alternative investment such as buy-to–let will become all the more relevant and attractive to consumers to provide for them a fund for their retirement. It may not be as fiscally attractive initially but in the long term it could be better than existing personal, private pensions.
It will be interesting to see the detail next week with respect to the taxes associated with off-shore companies buying property in the UK
It will be interesting to see the detail next week with respect to the taxes associated with off-shore companies buying property in the UK (Capital Gains and Annual Management Charges). This could have a profound effect on the prime and super-prime markets particularly in London. Existing entrepreneurs, who have already bought properties in the Capital worth over £2million, will no doubt be watching closely next week since this could have a material effect on the properties available on the market between now and April when the new rules bite.
These markets are reliant on a delicate ratio of supply and demand and if supply increases artificially in the next five months this could alter the balance and have a knock on effect on values. The devil will be in the detail.
Although wealthy entrepreneurs both local and international will not appreciate the changes that have taken place since the Budget this year the fiscal environment in the UK, for this sector of the market, is still infinitely better than anywhere else in Europe (apart from Monaco) and certainly the USA. I think that London will remain ‘the greatest city on earth’ and will still attract the rich investors from abroad as it has progressively done over the last 30 years. London is the bastion of political, economic and fiscal stability and I see no reason why this should not remain so.
The Chancellor’s comments about deficit reduction will calm the Capital markets and the projection on UK growth when compared, with say Europe, are very encouraging all of which, in aggregate, serves to allay the fears of those who need confidence boosting.
Frankly it could have been much worse and I think we should be grateful that in these austere circumstances the Chancellor has given us the best of a bad job.