Real estate investors in the UK are deprived of tax benefits

There are only a couple of weeks before the market for residential real estate in the UK “Buy to let” will face an increased tax burden in the form of increased Stamp duty, which will come into force on 1 April 2016. Investors are depressed in anticipation of an unpleasant change . And the British government decided to present another unpleasant surprise for investors in UK property, excluding them from a list of persons who are subject to tax incentives for the payment of Capital Gains Tax – “tax on capital gains” .

The government’s aim is to pave the way for the first – time buyers bought their homes. The aggressive behavior of investors pushing property prices upwards for several years now, the prices of property in London has grown continuously for several years until 2015, and ordinary buyers who want to embark on the path of acquiring their own homes, unable to accumulate even the initial payment. However, the result announced tough measures against investors could raise rents, as landlords will inevitably try to shift the increased tax burden on the shoulders of the tenants, which will further complicate the financial situation of those who first buys a house.

Moreover, a representative industry of the UK property sounding the alarm, expressing fears that this year’s measures can lead to mass withdrawal of landlords from the private sector rental real estate and their transition, for example, in the commercial sector of real estate or investing their capital in other areas. Such an outflow of capital from the industry can lead to a sharp reduction in construction and large-scale crisis in the housing market in the UK. The imbalance of supply and demand in the market of real estate of great Britain now is a major problem that hinders the movement of the market. The news that investors will be deprived of benefits in terms of a “tax on capital gains”, will allow investors flexibility to diversify its portfolio. Of course, this kind of news didn’t add sentiments to investors .

Representatives of the real estate industry is very concerned about the situation in connection with the pressure on investors from the government and Express concern that such measures can lead to the fact that , having a very negative result, the UK government will soon solve the inverse problem – how to bring investors to the market.

® Alice Morgan. 16. 03.2016 G.

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