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UK Real Estate Market: Continued rise in stamp duty taxes runs the risk of damaging future investment

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UK Real Estate Market

It feels like a long time since George Osborne delivered a budget without some form of significant change to the tax structure on UK property investment. While the sector has undoubtedly performed well in recent years, and may be seen as an easy target to generate some additional income for the Treasury, there are inherent risks attached with making the UK a less attractive and viable investment proposition to institutional investors. Over the long term, should the rise in tax damage the reputation of the UK as a country where investors can operate within a stable fiscal environment, then the potential loss of investment, particularly from overseas buyers, may cause far more long-term damage than it creates in raising short-term revenues.

In the summer 2015 budget it was announced that in an attempt to dampen the buy-to-let market, the tax relief which enables landlords to offset their mortgage interest against rental income would be phased out from 2017 onwards. Companies, however, were exempt and subsequently a large number of private landlords registered their property portfolios as limited companies to avoid the change in regulation.

Source : UBS AG

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