Tax year changes affecting the property market

Posted 25 April 2016 by Helen Christie

The new tax year usually brings some changes to the property market and 2016 has been no different.

Whether you already own a home, let a property or are thinking of buying a new house, here are some of those changes in April that could be of interest to you...

Wear and tear allowance

The wear and tear allowance available to landlords changed to a new tax relief system. Previously, landlords could claim a general 10% off their net income due to 'wear and tear' i.e., for the replacement of furniture and furnishings in rented residential accommodation. From April 2016, landlords can only claim for specific items that are replaced. These net expenses are then deducted from net income. 

Stamp duty

Anyone buying a second property in addition to their main residence within the UK has to pay an extra Stamp Duty Land Tax (SDLT) surcharge. This is 3% (of the property's overall value) on top of the existing stamp duty rate. Mainly designed to slow down the buy-to-let market, this new charge means that anyone buying a new house for £200,000, for instance, would now pay an extra £6,000 on top of the standard £4,000 stamp duty charge. There are some, although limited, exemptions.

Shared ownership

The eligibility criteria for the Help to Buy Shared Ownership scheme in England was relaxed. Now, anyone with a household income of less than £80,000 outside London and £90,000 inside London can apply to buy a new home through Shared Ownership. In addition, priority will be only be given to military personnel rather than other groups (such as council tenants) as was the case before April this year. It's estimated 175,000 more people will be able to buy via Shared Ownership because of this change.

Click here for more information on Shared Ownership

Rent-a-Room Scheme

The tax allowance available for the government's Rent-a-Room Scheme was increased. This now allows homeowners who rent out a room in their property to earn as much as £7,500 without having to pay tax. Before April 2016 the allowance was £4,250.

Rental efficiency rules

From April 2016, all tenants can ask for improvements to be made to the energy efficiency of their private rented accommodation. It's not legally possible, for the landlord to 'unreasonably' refuse to agree to these changes. At the same time, it's up to the tenant to pay for any improvements made and not the landlord. That's unless the landlord agrees to share the cost with the tenant. These changes are in preparation for further energy efficiency rules being introduced for rental properties in England and Wales in 2018.

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