2007 Budget Brings Positive News for Overseas Property Industry

Yesterday saw Gordon Brown deliver his eleventh Budget, and the news for owners and potential buyers of overseas property was positive.

The main change that will affect owners of overseas property was the announcement that the benefits in kind charge, which applies to owners of overseas property who hold that property within a company, is to be removed. The benefits in kind charge applies if a buyer sets up a company to hold the title deeds of an overseas property. The buyer is currently treated as a director or ‘shadow director’ of that company, and as such they are liable for the benefits in kind charge for the benefit of spending time in a holiday home. The owner is currently charged on the ‘rental value’ of the time they spend in the property.

Other positive news for owners of overseas property was the decision by the Chancellor not to add VAT to the price of airline tickets, which keeps international travel affordable. Also, reductions to personal tax rates mean investment in overseas property will be accessible to more people.

Many people involved with the UK property market were hopeful that yesterday’s Budget would also include a change in the current thresholds for stamp duty, which are widely considered to be unfair and to inhibit first-time buyers from purchasing in the UK. Until first-time buyers are exempted from stamp duty, or the duty is changed so it is charged in ‘steps’ rather than the current ‘slab system’, then this is likely to make the UK a less appealing option for first-time buyers as well as families wishing to move up the property ladder. Therefore, interest in overseas property can be expected to rise.

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