Tax year changes of interest to the housing market
The new tax year of 2016 has brought changes that could affect those involved with property including those buying new houses.
For landlords, tenants or potential buyers of new houses, we look at some of those changes in April 2016 that could affect you…
More people are eligible to buy a new house or older property through Help to Buy & Shared Ownership in England. That’s the result of the eligibility criteria being relaxed. Now, any household outside London that has a total income of less than £80,000 (or £90,000 inside London) and fulfils other criteria can apply to buy a new house through Shared Ownership. The priority criteria is also different with only military personnel given preference over others. It’s estimated that because of these changes around 175,000 more people may be eligible to buy new houses and other property through Shared Ownership.
Energy efficiency rules
Improvements in the energy efficiency of private rented accommodation can be asked for by tenants and, as of April 2016, it’s against the law for a landlord to ‘unreasonably’ deny this request. However, it’s the tenant who has to pay for the work carried out, although the landlord can offer to pay some of the cost as well. This is seen as a first step before further energy efficiency changes are implemented in 2018 for private rented accommodation in England and Wales.
A 3% surcharge is applied to the existing Stamp Duty Land Tax (SDLT) for anyone buying a second property in addition to their main residence within the UK. This extra 3% (of the property’s overall value) is designed to calm down the busy buy-to-let market. It means that a buyer purchasing a second property for £300,000 would pay an extra £9,000. This in addition to the £6,000 already charged for a property in that SDLT band. Some limited exemptions can apply.
Wear and tear allowance
Before April 2016, landlords of rented residential accommodation could claim back a general 10% of their net income for the cost of replacing furniture and furnishings. This was known as the wear and tear allowance. This has changed to landlords being only able to claim for specific items which are replaced. These specific, proven costs are then deducted from net income received.
The amount homeowners can earn from the government’s Rent-a-Room Scheme without being taxed has increased. From the limit of £4,250 before April, homeowners who rent out a room in their home can now earn up to £7,500 before being taxed.