We're still open for business!
All our staff are currently working from home.
If you wish to contact us or our branches, please call on 020 3953 8030.
This year’s earlier than usual Budget – brought forward to give the government more time to concentrate on Brexit negotiations – contained few surprises from a property point of view, with some in the industry slamming it as lacklustre and boring.
Here, using our experience working as estate agents in North London, East London, Essex and Hertfordshire, we take a closer at what was announced in Philip Hammond’s speech.
Stamp duty relief extended to shared ownership buyers
Plans were announced to abolish stamp duty for first-time buyers of shared ownership properties worth up to £500,000, following on from the original announcement at last year’s Budget that stamp duty would be removed for all first-time buyers purchasing a home worth up to £300,000.
According to the Chancellor, that measure has so far aided 121,500 people, while the number of first-time buyers is at an 11-year high.
The government will hope this extension of stamp duty relief will encourage more people to take the shared ownership route – where a person purchases between 25% and 75% of a home and then pays rent on the rest of it. It’s a halfway house between renting and buying, essentially, with both mortgage and rent payments each month and the chance to staircase up to own a greater share of the property over time.
What’s more, the measure will be backdated to last year’s Budget, so anyone who has bought a shared ownership property since November 22 2017 will be able to claim a refund.
In a further effort to help first-time buyers take their first step on the property ladder, Hammond also announced that the Help to Buy equity loan scheme – where the government lends money to first-time purchasers to enable them to achieve their home ownership dreams – will finish in 2023, two years later than its original planned end date of April 2021.
The scheme, first launched in 2013 by then-Chancellor George Osborne, allows people to purchase a home with a smaller deposit and a cheaper mortgage than would otherwise be the case. The government lends up to 20% (up to 40% in London to reflect the higher prices at play) of the cost of a newly built home, meaning buyers only need a small deposit and a smaller mortgage to make up the rest.
It’s proved controversial over the years, with critics saying it has merely inflated house prices and actually made it more difficult for first-time buyers to purchase homes, while supporters say it has boosted those who would otherwise be unable to afford a property.
What else was announced?
In a low-key Budget for housing, there were a few other points of interest. The Chancellor pledged an additional £500 million for the Housing Infrastructure Fund to support the construction of 650,000 new homes. The fund is a pot of money which local authorities can apply to for help with building new properties.
The job of building new homes will become easier after the Chancellor confirmed that the borrowing cap on local councils will be lifted – something announced by Theresa May in her recent conference speech – although further details on this were thin on the ground.
Another of May’s conference pledges was also fleshed out, with confirmation that a consultation will be held in January 2019 on an extra 1% stamp levy for foreign buyers of UK homes. There had originally been talk that this could be up to 3%.
The extra 1% surcharge for non-residents buying residential property in England and Northern Ireland will be on top of the 3% stamp duty surcharge that all buyers of second homes already have to pay.
In addition, the government says it has arranged deals with nine housing associations to deliver 13,000 homes across England, while there will be up to £1 billion of British Business Bank guarantees to support the revival of small and medium-sized housebuilders. The government is also providing funding to up to 500 neighbourhoods to allocate or permission land for housing, which will be for sale at a discount to local people in perpetuity.
What wasn’t said?
We received no new information about the ban on letting fees charged to tenants, with the timetable of implementation for this controversial measure still up in the air.
There was also no follow-up on the government’s proposed three-year tenancies plan, while rumours that financial incentives might be offered to encourage landlords to sell to long-term tenants proved wide of the mark.
In all, it was a Budget with little to get excited about from a property perspective. Some might say that’s a relief after the divisive announcements in recent Budgets – including the ban on letting agent fees, the introduction of the stamp duty surcharge and the phasing out or mortgage interest tax relief – but others will be disappointed that the government’s much-talked about plans to fix the broken housing market still aren’t really being backed up with decisive action.
If you would like any guidance on selling a property in Hertford, Bethnal Green, Essex and the surrounding areas, contact your local Kings Group branch today.
To see how much your home could be worth on the current market, you can request a free instant online valuation.