Downsizing IHT protection will stop market cooling

Downsizing IHT protection will stop market cooling

When George Osborne stood up and said: “This is a big budget for a country with big ambitions”, it became apparent to me why so much around the housing market had been leaked beforehand.

In other words, he had a lot to get through.

There was very little about getting Britain building in his speech, perhaps because the government had already announced its intention to build 200,000 new starter homes and offer at below market rate to first time buyers under 40.

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The government intends to release public land and brownfield sites to encourage the public into the custom-build market, and of course the announcement to extend the Right-to-Buy to 1.3m housing association tenants. Further planning reforms are due out on Friday (10 July), which will be an interesting read.

However in his speech, the chancellor did confirm the government’s unwavering support for home ownership and confirmed the intention of introducing the Help-to-Buy Isa this autumn.

The most interesting reform in the budget speech was in the chancellor’s words was creating a “more level playing-field between between those buying a home to let, and those who are buying a home to live in”.

Landlords he claimed, have an unfair advantage by being able to offset their mortgage interest payments against the rental income at their highest rate of tax. This will start to be reduced over a four year period starting from April 2017, down to the basic rate of tax.

Furthermore, in the full document, another change is being made to stop landlords claiming wear-and-tear relief even if they have not carried out any improvements.

I think that the most popular part of the chancellors budget will be the effective increase in inheritance tax allowance by £175,000 per person if they leave their home to children or grandchildren.

I also think it’s a great idea to protect this inheritance should the parents or grandparents downsize. Without this concession we would have seen less property come onto the market in order to protect inheritance.

David Copland, director of TMA