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  • Property-a-holics

    The Budget In A Nutshell

    Budget 2009 In A Nutshell - For those, like me, who want a 30 second fix
    The Chancellor, Alistair Darling, outlined his plans and expectations for the economy over the next 12 months. For those like me who want a concise version here is what was said:
    * Stamp Duty ‘holiday’ - with no Stamp Duty payable on transactions up to £175,000 - extended until the end of the year.
    * Extension of the Support for Mortgage Interest scheme, which covers mortgage interest payments for those who have lost their jobs, for a further six months.
    * The major UK banks will increase the availability of mortgages by around £20bn this year.
    * Mortgage-backed securities guarantee scheme, based on the recommendations of Sir James Crosby, introduced from today following State Aid approval.
    * Further £80bn of funding for HomeBuy Direct shared equity scheme.
    * Restriction on pension tax relief for those with incomes in excess of £150,000, gradually tapered to the 20% rate.
    * New income tax band of 50% for those earning in excess of £150,000 to come in from next April.
    * £500m package to help housebuilders kickstart stalled housing projects.
    * A report on the reform of regulation to be published by the Treasury shortly, to improve regulation of capital and liquidity so that banks do not overstretch themselves and strengthen regulators’ powers.
    * Increase in the ISA limit to £10,200 (Cash and Stocks ISA), for the over 50s from this year, and for everyone else next year. Of the new limit, £5,100 can be saved in cash only.
    If you have any thoughts or comments please leave a response.
    Regards
    Wasim
    Mortgage Broker Extraordinaire
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    Thanks for this, Wasim.
    Thought the below was interesting too, in terms of how digital is a major priority. Relevant to trend of people working from home.
    Budget confirms broadband investment.
    Chancellor Alastair Darling has announced that the government will push ahead with plans to roll out 2Mbps broadband across the UK in his 2009 Budget speech today (April 22nd).
    Wednesday, 22 April 2009
    Chancellor Alastair Darling has announced that the government will push ahead with plans to roll out 2Mbps broadband across the UK in his 2009 Budget speech today (April 22nd).
    He said that the government will deploy universal broadband service and invest more in the promotion of broadband take up and the building of basic digital skills.
    The Budget also confirms that approval has been given to set up a Digital Region, which will take the form of a £100 million project to implement next generation broadband services in South Yorkshire, led by regional development agency Yorkshire Forward.
    "I am allocating extra funding for digital investment to help to extend the broadband network to almost every community," Darling said.
    "This will allow us to deliver the vision set out in the Digital Britain report - making sure everyone can benefit from this communications revolution and create thousands more skilled jobs."
    Overall, £10 billion is to be set aside for the communications sector, including a new £750 million Strategic Investment Fund to offer financial support to the emerging technologies industry sectors that have regional importance, such as digital media, advanced manufacturing and biotechnology.
    In addition, the government will organise a review of the powers and duties of Ofcom, the UK's communications regulator, to check that it is able to find the right balance when it comes to promoting investment and competition.
    This year's Budget was delivered over a variety of online platforms, with live video, social media and blogging playing a key role both officially and in the press.
    Twitter was used by Downing Street to send live updates on the Budget speech to its followers, for example.
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    Budget: Harsh criticism from the property industry
    By Graham Norwood
    Last Updated: 5:46PM BST 22 Apr 2009
    The head of research at Savills, Yolande Barnes, says the Chancellor’s measures aimed at improving the housing market have “neither addressed the underlying structural problems of the market nor some of the new challenges it faces in future.”
    She said the £600m announced to help private housebuilders resume work on some stalled schemes was small compared to the 50,000 or so homes currently at some stage of construction but mothballed until the housing market improves.
    But she reserved her main criticism for the Chancellor’s extension of the stamp duty holiday for homes costing £175,000 or more. Like many other estate agents operating at all sectors of the market, it had called for more radical measures.
    “It’s currently a huge barrier to market entry for first time buyers who, especially in London and the south east, have to find huge sums for this as well as their deposit. It’s a pity that the budget didn’t announce a stamp duty amnesty for all first time buyers or, more radical still, look at charging vendors rather than purchasers to eliminate the market entry problem” says Barnes.
    Knight Frank, another top end agent, has been equally critical.
    Liam Bailey, head of residential research, says the government had exhausted its main lever on the housing market – reducing interest rates – so the influence of the measures announced in the Budget would be small.
    “Their effect in stimulating activity, whether in terms of sales or in building more homes, is likely to be relatively limited” he says.
    Jon Neale, head of development research at Knight Frank, says the extra £80m for the HomeBuy Direct shared ownership scheme will help a maximum of 10,000 buyers. “Given that even in these quiet times, around 10,000 new mortgages are being approved per month to first-time buyers, it seems apparent that its impact on the housing market and developers’ balance sheets will be fairly marginal” he says.
    But there has been praise for two detailed proposals contained in the Budget documentation released after the Chancellor made his speech.
    One is a pledge to consider tax breaks to encourage ‘up front’ investment in homes. This is called Build To Let, and is popular in the US where investment funds pay for new flats to be built, then let them out and earn long-term profits from rental income.
    This could be an alternative to the now-discredited buy to let business model, which relies on small-scale landlords buying properties built speculatively by developers. A key problem in the current downturn has been that landlords have stopped buying properties in the UK, leaving thousands of new flats unsold around the country.
    The other measure to win some support has been the delay in the introduction of the Community Infrastructure Levy, a development tax to have been implemented later this year. “If the government had pressed ahead with CIL too soon, there was a real danger that today’s market boosting measures would be negated, and any green shoots strangled before germination” says Roger Hepher of Savills.
    However, the government says the CIL is merely delayed until April 2010 – by which time, it hopes, the housing market will be on the road to recovery.
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    Hi
    A couple of interesting links from Sky News...
    High Earners Will Dodge The New Tax Rate ... I saw this story on Sky News this morning...some people are so slow.
    and Theo Would Sack Darling
    In the real world the Chancellor wouldnt have a job as he only tells us what Gordon tells him to say...And we voted this guy in?!
    Regards
    Wasim
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    Thanks for the budget/property summary!
    John Corey
    https://www.ChelseaPrivateEquity.com/blog
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    Darling, It appears that our Holiday Let tax breaks are being vanquished!
    https://news.bbc.co.uk/1/hi/business/8013022.stm
    Regards
    Simon - Landlord Finance
    t: 0114 221 7229
    m: 0785 277 2545
    e: simon.dearing@landlordfinanceltd.com
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