Property Directives Need To Be Revised
Housing Minister Grant Shapps may have abolished HIPs less than 1 week ago, but property experts Knight Frank feel much more could be done by the government to improve the liquidity of the property market.
Reviewing existing property investment directives, Residential Research Head Liam Bailey believes the government needs to make some major alterations to the following directives if they are to succeed in encouraging increased property investment.
Energy Performance Certificate: originally conceived by the European Union Directive, EPC’s are the only legal documentation to have survived the abolishment of HIPs. Yet despite their ability to help property owners to assess the energy efficiency of their homes, overall Bailey feels that they supply no real consumer benefit to property sales, other than a cost of £100 million a year (based on a low volume market). For this reason alternative means should be looked into.
Papers and property searches: extremely time consuming, Bailey is confident that these could easily be improved to help make the property sale process more efficient. Due to property owners depending heavily on local authorities to confirm potential planning complications, by introducing a set time limit for local authorities to provide this information this would ensure for a much more efficient sales process.
E-conveyancing: whilst this system as of yet hasn’t been implemented, when it is it could help property agents, solicitors, sellers and property investors to view the progress of their chain completely online. Essentially by making the sale process more transparent, this can help to remove frustrations experienced by each of these parties as the information will readily be available on their computer.
Estate and property letting agents: more needs to be done to license these two property groups according to Bailey. By doing so, this would ensure increased consumer protection for all parties involved, including homeowners and property investors.
Stamp Duties: if long term property investment in the industry is to be improved, Knight Frank feels the method for implementing Stamp Duties should be changed. Instead of charging property investors stamp duties for the total value of their property portfolio, Knight feels that they should instead be applied to properties individually. Not only would this increase liquidity across the property market, but by also introducing a Real Estate Investment Trust (REIT) structure to the system this would encourage more long term investments.
Capital Gains Tax: whilst it may be too late to prevent the rise of Capital Gains Taxes, Bailey feels that by recognising the difference between long and short term gains on property investments, the government could confidently implement a taper relief structure that would ensure that property investors are not over taxed.
As it currently stands, Stamp Duties can be quite costly for property investors who spend only a £1 over £250,000, £500,000 and as of next April £1 million. With tax jumps worth thousands of pounds at a time, the existing Stamp Duty scheme hinders investment and dampens liquidity.
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Tags: property experts, property investment, property investors, property market, property owners, property portfolio, property sales
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