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How will the 2015 Budget affect the Knightsbridge property market?

Hobart Slater Founding Director Roger Slater looks at how the July 2015 Budget could affect the Knightsbridge property market.

 

 

Inheritance tax

Changes to inheritance tax have been announced to increase the threshold to £1 million for couples in 2017. Parents will also be able to leave homes worth up to £1 million to their children tax free from 2020.

Although this is good news for those with property up to a million, the allowance will be gradually withdrawn for estates worth over £2 million.

 

Permanent non-dom status abolition

Non-domiciled individuals (those who live in the UK but have a permanent home elsewhere) will no longer be able to avoid tax on their offshore income if they have lived in the UK for 15 of the last 20 years.

Although this could feasibly have an effect on property sales Knightsbridge, there are many other factors that lead people to choose London as a place to live, so the effects are unlikely to be long lasting.

 

Buy to let tax relief reduction

From 2017, landlords will be restricted to 20% tax relief on buy to let properties. There will also be reductions on how much costs landlords can claim for wear and tear.

This will have an effect on the investment market, especially on those with large portfolios, but it is a complex situation, and could lead to a variety of outcomes including higher competition for rental properties if there are less on the market.

 

What are the long term effects?

With a recent GC Privé report asserting that Knightsbridge is “undoubtedly the world's most sought-after neighbourhood” and “the most highly sought-after destination for ultra-high net worth individuals” these changes are unlikely to have any long term effect on the Knightsbridge property market. 

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