Property Outlook for 2011

Posted: Monday, 3 January 2011 @ 18:35

Below are my 5 key talking points for the property market over the next 12 months:

1. Interest Rates

With continued high inflation becoming a concern it is likely that the current ultra low interest rates will begin to rise steadily later this year. This could lead to a higher volume of properties being marketed for sale in 2011 as loan repayments increase.

2. Bank Finance

I expect the same hard slog in 2011, with a continued lack of Bank finance availability for property investment and development opportunities, without a pre-let agreement being secured. In my experience of cases where Bank finance is available the high cost of borrowing is putting businesses off.

We have expertise in advising on alternative methods to raise funds for the purchase of commercial property including joint ventures and pension arrangements.

3. VAT increase

The rate of VAT increased to 20% from 4 January. When buying or leasing business premises take account of this as VAT is often payable on the purchase price/rent.

4. Capital allowance changes

Several amendments are proposed to the capital allowances regime. The changes will take effect from April 2012 and include reductions to:

(a) the rate of writing down allowances (WDAs) from 20% to 18% for all assets other than those in the special rate pool;

(b) the rate of WDAs for assets in the special rate pool (e.g. integral features, long life assets), from 10% to 8%;

(c) the Annual Investment Allowance, which broadly entitles businesses to claim 100% of the cost of qualifying plant and machinery (except for cars) as a deduction from their profits, from £100,000 to £25,000.

As a result of these planned changes it may prove to be an incentive for businesses to bring forward their planned capital expenditure to 2011, in order to take advantage of the current higher rates.

If you have already incurred capital expenditure but not claimed the allowances in full it is not too late. Please get in touch.

5. Stamp Duty Land Tax

From 6 April the amount of Stamp Duty Land Tax payable on a residential purchase of £1m + will rise from 4% to 5%. We can advise on option available to reduce the amount of Stamp Duty payable on both commercial and residential purchases.

Steve Petty
Commercial Property Solicitor
01926 629 005

This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation to discuss your particular circumstances.

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