Breaking Property News – 03/10/2023

Daily bite-sized proptech and property news in partnership with Proptech-X.

 

CEO of novvy weighs up impact of any Inheritance Tax Threshold change on UK Real Estate

Inheritance Tax (IHT) is a subject that continuously sparks discussion and excitement in this country where a substantial proportion of every household’s inheritance is property. IHT regulations have stayed constant for years, and their effects on the real estate market have generated a lot of conjecture. Recent discussions about raising the inheritance tax threshold or reducing the rate of levy have brought this issue to the fore of economic and real estate discussions, says Ashish Saraff, CEO of Novyy Technologies.

‘The idea of raising the Inheritance Tax (IHT) threshold has generated a lot of interest and debate. The IHT threshold is currently just £325,000, and the excess is subject to a 40% tax rate. Thanks to the addition of a new allowance in 2017, couples can leave property worth up to £1 million tax-free to their next generation. The primary home nil-rate band allows for a £175,000 tax-free allowance in the tax year 2023–24, which equates to £500,000 for individuals and £1 million for couples.’

Ashish Saraff highlights the potential advantages of this increased allowance for estate planning. The fact that HMRC collected merely £7 billion in inheritance tax last year demonstrates its insignificance in the UK revenue system, being less than 1% of the total tax collection. While the headline rate for IHT is 40%, HMRC data shows that the effective rate paid by most estates after adjusting for reliefs and allowances is under 15%, says Saraff. So why have a negative headline at all!

Is there a proposal for changing the IHT?

The Sunday Times reported that Prime Minister Rishi Sunak is considering lowering the levy with a stepwise plan to abolish it altogether in an unspecified period. Minister Grant Shapps said to Sky TV that this is mere speculation. On the one hand, IHT impacts less than 5% of UK households which means it affects the richest 1% only. So it is really seen as a tax on the rich or super asset rich. While there is no formal announcement from the government on this matter but there is increasing speculation about this being a pre-election strategy.’

What could be the potential impact on consumer behaviour if IHT threshold changes?

‘According to recent reports, the ultimate goal behind the cut to the inheritance tax is scrapping the levy altogether. While this proposal is still in its initial stages and has yet to be formally planned, it has the potential to influence buyer behaviour within the UK real estate market. Here is how:

People would invest more in real estate if the inheritance tax threshold were increased or repealed because they might anticipate less tax liability for their heirs. The desire to pass on additional assets to their heirs without facing heavy tax costs may lead buyers to buy more, such as second houses or investment properties.

The current structure for inheritance tax gives an additional exemption for handing down the family house to children or grandchildren. An enhancement or removal of the inheritance tax could intensify the motivation for individuals to buy and hold family homes as they seek to secure this tax-free allowance for their descendants.

Purchasers and property owners may review their estate planning plans as prospective changes to the inheritance tax threshold loom. This could result in a change in the dynamics of property ownership, with people arranging their assets to reduce their tax obligations while making sure their intended beneficiaries acquire their property assets in an efficient manner.

The real estate market may experience an increase in demand if the inheritance tax threshold is favourably altered, especially among high-net-worth individuals who may have been discouraged by hefty inheritance tax liabilities. This rising demand might have an impact on the market’s competition and property values.

If adopted, the suggested inheritance tax reforms will have a long-term impact on the UK real estate market. Buyers may base their decisions on their predictions for future tax policies, which could result in an increase in the number of real estate transactions.’

According to Ashish Saraff, CEO of Novyy Technologies, any changes to inheritance tax laws might have a significant impact on how purchasers and investors behave in the UK real estate market. He comments that,

‘It is important to note that, despite discussions at the highest levels of government, no formal plans for these changes have been drawn up. In addition, how any proposed changes to the inheritance tax threshold are tailored and how they interact with broader economic and political issues will affect consumer behaviour. To make informed decisions about their real estate holdings and investments, buyers and investors should closely follow trends in this industry and seek professional guidance.’

Staying ahead in property means providing an Amazon style customer expereience

Agents are experiencing growing expectations from consumers when it comes to service, communication and timescales – with speeding up the transaction process and better communication high on the agenda.

New industry data reveals that 89% of consumers recently surveyed* said that exceptional customer service is the most important thing to them when choosing any brand or service provider in all areas of their lives. When it comes to selecting an Estate Agent, over half based their decision on past experiences of working with them and customer service.

These findings have been released by iamproperty, following a survey of consumers who have sold a property in the UK in the last two years, to support Estate Agents to get ahead by exploring what buyers and sellers really want, and understanding more about the experience they expect.

When asked what exceptional customer service looked like to them, 87% of respondents said clear, responsive and transparent communication mattered most, while 76% said that companies giving a realistic expectation of timeframes was the most important thing.

Lack of timely and transparent communication throughout the moving process remains a big frustration across the industry for everyone involved in transactions. This is where automation-driven technology comes into its own, working in the background to give consumers more of what they expect and value when working with other everyday service providers.

It is no surprise that when asked which big brands are great at customer service, more than 50% said Amazon, placing ahead of others including AppleGoogleNetflix and Uber. Speed of service, clear communication, personalisation and the way in which problems are resolved are the things people value most about their Amazon experience. The secret to this success is automation, all designed with customer service and personalisation at the heart.

With a major decision like choosing an Estate Agent to manage a property sale, customer service becomes even more important. What respondents valued most from their experience of working with an agent was a friendly attitude (62%), followed by their local knowledge and expertise (55%). These are things that automation can’t replace and will always require the human touch. However, automation can enable agents to spend their time in the places that add most value to the client experience, without other parts of the process slowing down.

More findings from this survey, including the top reasons why consumers have previously chosen their Estate Agent can be found in iamproperty’s latest Tech of a Life magazine, which has launched to agents this week, bringing together thought leading insights from industry experts.

Ben Ridgway, Co-Founder and MD of iamproperty, said: “In our recent surveys of UK Estate Agents, they discussed the growing expectations and heighted emotional involvement consumers have, with speed and communication high on the agenda. As a follow on to our agent discussions, we went out to the UK consumer to find out more. It’s a really interesting topic within our latest Tech of a Life, which is all about visionary thinking and looking to the future.

“Whether housing stock is high or low, one thing remains constant for agents – competition for instructions. This latest research confirms that understanding today’s consumers’ needs and investing in delivering the five-star customer service they are accustomed to in other areas of their lives is key, with a focus not just on getting great results for clients, but also giving them a great experience of working with you.

“Consumer priorities are always evolving, so we hope these fresh insights support agents with staying ahead. It’s an opportunity to find out what buyers and sellers really want in today’s market and think strategically about how to deliver this and attract new clients. Automation is going to become even more key to enabling the level of customer service that people are coming to expect across all areas of their lives, and it is a big focus for us in our innovation roadmap within new solutions we’re working on bringing to the market, and existing solutions in our iamproperty ecosystem.”

 

Andrew Stanton Executive Editor – moving property and proptech forward. PropTech-X

Andrew Stanton

CEO & Founder Proptech-PR. Proptech Real Estate Influencer, Executive Editor of Estate Agent Networking. Leading PR consultancy in Proptech & Real Estate.

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