08 July 2015, Rory O'neill, head of residential at Carter Jonas, comments on implications for the residential property market.

In response to today’s Budget announcement, we find that there are a number of implications for the property markets. With a lack of comment affecting the Commercial, Rural and Development industries, and Planning Reforms expected to be announced on Friday (10 July 2015), we discuss the impending impact for the Residential property market, highlighting four key areas.

1. Non doms: As part of the Chancellor’s plan to recoup £7.2bn from tax evasion, classification for non-domiciled status will be massively overhauled. People who have resided in the UK for more than 15 of the past 20 years, and also people who are born in the UK will no longer have the right to claim this status, essentially eliminating the existence of permanent non-domiciled persons. Although this is obviously a significant change, we do not feel it will impact the Prime Central London (PCL) market to the extent that early commentators are predicting.

2. Buy to let: In an effort to rebalance the housing market in terms of investor/ owner-occupier costs, the Chancellor has assured that from April 2017 landlords will no longer be able to benefit from mortgage tax relief. This will now be restricted to the basic rate.

Whilst many will presume that this will result in increased landlord costs being passed on to the tenant through increased rent, the truth is that the market will always dictate rents rather than the landlord.

3. Bank levy: Another announcement that could possibly impact the residential investment world is the news that the bank levy will be progressively phased out and replaced by a profits tax. This slow unwinding of post-crash bank charges should provide confidence to the big banks, resulting ultimately in the underpinning of tenant demand in the PCL lettings market for the foreseeable future.

4. IHT: As previously reported, the Chancellor announced that the threshold for inheritance tax will be raised to £1m per estate.

Interestingly, comment was made regarding the non-punishment of downsizers; the detail behind this will no doubt emerge in the coming days.

A notable omission in the Chancellor’s speech was any mention of how the need for additional new homes will be met, specifically the widely discussed plans for new garden cities. This could be taken as an indication of the government’s limited ability to provide the 250,000 houses needed per annum during this parliament.