It didn’t thrill the industry but property did feature in this week’s Budget. Here’s the lowdown. Sharon Dale reports.
This week’s Budget was a disappointment for some. A call for stamp duty exemptions to encourage downsizing and the freeing up of family-size homes went unheeded and landlords gained no concessions on recent tax increases. A suggestion of encouraging landlords to sell rental properties to long-term tenants in return for capital gains tax relief was also ignored but here is what Chancellor Philip Hammond did do:
*The Help to Buy equity loan scheme comes to an end in 2011 but it will be extended until 2023 for first-time buyers only.
The value of homes that can be bought through the scheme, which provides a government-backed loan of up to 20 per cent, interest-free for five years.
This will be capped and based on regional property prices set at 1.5 times the average first-time buyer price. This is up to a maximum of £228,100 in Yorkshire.
The government does not intend to introduce a further Help to Buy equity loan scheme.
*Stamp Duty. The Chancellor abolished Stamp Duty for first-time buyers purchasing a home valued up to £300,000 in his last Budget. This has been extended to shared ownership properties valued up to £500,000 and will be backdated to any first-time buyer who has bought a shared home since last year’s Budget.
*Council houses and discounted homes. The government will provide £8.5 million of resource support so that up to 500 parishes can allocate or permission land for homes sold at a discount. The government will also explore how it can empower neighbourhood groups to offer these homes first to people with a direct connection to the local area.
The Budget also brought confirmation that a cap that limits a council’s ability to borrow money to build houses will be scrapped leaving local authorities free to build homes.
*Foreign buyers. The stamp duty surcharge on foreign buyers will not be three per cent as originally planned. The government will consult on a reduced surcharge of one per cent for non-residents.
*Rental Sector. Capital gains tax lettings relief is to be reformed. From 2020 it will only apply where the owner of the property is in shared occupancy with the tenant.
Lettings relief can reduce the capital gains tax on the sale of a rental property which has previously been used as the taxpayer’s residence.
*No change to rent-a-room relief. The proposed shared occupancy test for those renting a room in their house has been dropped.
This would have brought an end to rent-a-room relief for people who rented out a single room in their house while they are absent from the property and effectively clamped down on those who let their whole home through Airbnb
The rent-a-room relief allows homeowners to earn an annual £7,500 tax free.
*High street homes. As part of his £1.5bn boost to help the UK’s struggling High Streets, Mr Hammond announced he was creating a £675m fund to help councils transform their main retail zones.He added that part of this money could be spent on turning unused high street shops, the spaces above them and commercial buildings into homes.
*Infrastructure: An extra £500m for the Housing Infrastructure Fund to help unlock sites that could support 650,000 more homes,
*Help for small builders. Small to medium size developers have struggled to get bank finance for projects. The Chancellor wants to see more SMEs building houses and has promised up to £1bn of British business bank guarantees
Mark Manning, managing director of Manning Stainton estate agents said: “The Chancellor largely ignored the housing market in his Budget,
“I would have liked to have seen him focus on the root causes of the problems faced by the market, and a key focus should have been on how to enable more new homes to be built more quickly and in the right places.
“The government needs to overhaul the process to ensure the huge amount of homes we need are built quickly. The Chancellor needs to focus on simplifying planning laws and making the planning process much quicker.
“I would have also like to have seen more emphasis on brownfield sites and incentives put in place to encourage builders to build on them. Landowners should be taxed on empty or derelict brownfield sites to encourage them to develop them.”
Glynis Frew, CEO of York-based Hunters Property, said: “It’s great to see this government taking social housing seriously again. What’s really important now is that the rhetoric translates into action on the ground.”
Liam Bailey, head of research at Knight Frank, believes the government still needs to reform stamp duty.
He says: “Stamp duty is a badly designed tax which reduces the efficient allocation of property, limits labour market mobility, reduces the ability of families to access housing that fits their requirements and ultimately reduces supply of new homes.”