Oh joy: it's that time of the year again when the Chancellor of the Exchequer stands up at the dispatch box in the House of Commons to announce his Budget. Which means that this month — on 16 March, to be precise — we'll know what George Osborne has in store for the property sector. Unusually, the Treasury has crowdsourced this budget by asking members of the public to submit their own tax and spend ideas via a website. So we'll see how many of those get through…
The other big news is the European referendum, which David Cameron has announced will take place on 23 June. The big unfathomable question is: what will happen to UK property prices if there's a Brexit?
House prices are high and deposits are huge. Ask any first-time buyer. Maybe this is why buying property with friends or family is becoming more common: it can spread the debt and help you find the home of your dreams. Or, of course, it could be a waking nightmare.
To avoid the latter scenario you really do need to have done some groundwork first. Whoever you are planning to buy a house with (think of it as a business deal), rent a property with them first so that you know you won't get on each other's nerves. If you're putting in different sized deposits, agree how the proceeds will be shared; plus, draw up a Declaration of Trust – a document where joint buyers decide how to share everything, including costs; and you might also consider buying the property as 'tenants in common'. This means that you can own different shares of the property (and it allows each buyer to dispose of their share independently). Get a joint bank account and keep on top of all documents relating to the purchase; and make a joint inventory of all contents in your new home. If you cover all the bases, you can move in together with confidence.
Last summer, George Osborne unveiled a nasty little surprise for landlords in his Budget. He is cutting the mortgage interest relief available to buy-to-let owners (which can be as much as 45 per cent to top rate tax payers) to the basic tax rate of 20 per cent, to be phased in over four years from 2017. As a result, new research shows that 40 per cent of landlords are either seriously considering forming a limited company — or are looking into it — because incorporation is a way to avoid the cuts. It also separates your personal assets and your business assets.
However, it isn't a straightforward process, and you should bear in mind that it opens you up to capital gains and potential stamp duty charges, which could make a big dent in any savings you make from incorporation. Seek independent advice before making any decision.
With the pound as strong as it is and higher house prices at home, more and more Brits are dreaming of owning a bolt-hole abroad (Spain is a particularly popular destination, apparently). Even so, if you're tempted to take the overseas property plunge, look before you leap.
First of all, research the market throughly and make sure that your favoured country doesn't prevent or limit foreigners buying properties. Get advice from independent professionals who know the country's laws and procedures, and get an evaluation. It's also crucial that all documents are translated into English. One other thing: with the European referendum looming in June, get some sound advice from your estate agent if you are eyeing up a house on the continent.