 First time buyers’ package will not kick-start property sector
23 March 2011: PKF Accountants & business advisers warns that the small scale support package for first time buyers announced in the Budget is more about politics than a genuine attempt to spark recovery in the property market.
Marios Gregori, tax partner at PKF, comments: “Supporting first time buyers will always generate headlines and the new package is good news for a few, but the reality is that the market is pretty stagnant for wider economic reasons.”
First time buyers will be able to get up to 20% off the cost of buying a new-build property as a low cost loan under a scheme backed by developers and the Government, leaving them only having to find a 5% deposit.
Marios says: “It will be much easier and cheaper for first time buyers to get a 75% loan from lenders and the five-year repayment holiday on the deposit loan will also improve affordability.
“But the moves to simplify the planning rules and the local authority development land pilots are likely to be much more important developments for businesses in the building industry, as will the changes to the calculation of the stamp duty land tax (SDLT) rate on bulk purchases. The expected consultation on making it simpler to convert commercial property into residential units could eventually prove to be very good news – just as well, as long established tax reliefs such as flat conversion allowances and land remediation relief will be abolished in April 2012.
“A report into the effectiveness of the 2010 SDLT holiday for first time buyers, which is due to lapse on 24 March 2012 is expected later this year, and remains to be seen whether the results prompt the Chancellor to extend this relief.”
Marios concludes: “One wonders how much the new 5% SDLT rate on residential property sales over £1m is actually going to raise in the next year or so. The Chancellor will not want to create another property bubble, but I think he has missed a trick by not cutting SDLT rates now to help trigger the property market recovery that the economy needs.”
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For further information, please contact:
Jane Murray, PR, 020 7065 0135, jane.murray@uk.pkf.com
Notes to Editors:
1. PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,500 partners and staff operating in 23 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience in the public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk
2. PKF (UK) LLP also offers financial services through its FSA authorised company, PKF Financial Planning Limited. PKF (Isle of Man) LLC is a limited liability company registered in the Isle of Man. PKF (Guernsey) Limited is incorporated in Guernsey.
3. PKF (UK) LLP is a member firm of the PKF International Limited network of legally independent firms. The PKF International Limited network has around 17,600 people operating in 120 countries around the world.
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