Phillip Hammond has unveiled the Government’s latest economic plan for our country, in what is being considered a bold pitch to millennials.
From axing stamp duty to council tax premiums and Help to Buy, here are the key points that first-time buyers, homeowners and landlords should be aware of.
“I’m Saving For My First Home…”
Hammond declared that the “Number of young people owning their own home has dropped from 59% to 38%”, before setting out his ambitious plan to tackle the housing crisis:
Stamp Duty Cut For First-Time Buyers
The room erupted with applause as Hammond announced that for all first time buyer purchases up to £300,000, he will axe stamp duty completely. And it was great news for London first time buyers too, as those buying a property worth up to £500,000 will not have to pay stamp duty on the first £300,000, saving £5,000.
What Do The Experts Think?
“Today’s announcement to abolish stamp duty tax on properties up to £300,000 will certainly give first time buyers a helping hand, but this alone will not fix the main problem which is a lack of housing and affordable housing.
Stamp duty isn’t the first thought for hopeful buyers – it’s finding a property that’s actually affordable. If there’s no affordable property on the market, people will still not be able to buy.
Hopefully Hammond will deliver on his promise that by the mid-2020s there will be 300,000 homes being built every year – as ultimately, to get first-time buyers on the ladder, the government needs to increase the volume of property on the market, which will in turn help those on the first, second and third rungs of the ladder move up, downsize or sell.” Mark Lawrinson, Regional Director, Portico London estate agents.
How Will This Affect Property Prices?
“If we increase the property supply to levels beyond demand, in the short-term, prices will soften or even come down slightly. In the long term, a higher supply of available property will mean a steady and affordable rate of price growth that will enable the next generation to become homeowners.” Mark Lawrinson, Regional Director, Portico London estate agents.
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Does Britain Already Have Enough Land To Solve The Housing Crisis?
Hammond was in agreement that we need to build more homes in order to get to grips with our national housing crisis, announcing a series of new homebuilding measures:
- £44 billion of capital funding to help build 300,000 homes annually by mid-2020s
- Homes will be built in high-demand areas and around transport hubs
Interestingly, Hammond announced that it’s not just money that’s needed to fix the housing crisis, but reform. Stating that there’s often a “gap” between planning permission and new homes being built, he announced that Oliver Letwin will be chairing a review to look up ways to speed up planning permission. Shockingly, there are currently 270,000 unused planning permissions in London alone.
Hammond finished by saying that if necessary, the government will take powers to intervene to ensure land is used for housing.
“For far too long the government has believed more houses will be built if more planning permission is granted, so it’s a great step forward that they are finally addressing this misconception. The government needs to prioritise training the construction workers of tomorrow, otherwise we will continue to have an unbalance of supply and demand which is keeping prices at an unaffordable level to many.” Robert Nichols, Chief Executive Officer, Portico London estate agents.
Extra £10 Billion Pumped Into Help to Buy
As Teresa May promised, the government will find an extra £10 billion for the Help to Buy scheme, which is great news for savers, enabling another 135,000 people to get on the property ladder.
The additional funding will help buyers get a mortgage with a deposit of as little as 5% to buy new build homes.
What is Help to Buy? A scheme that offers a 20% equity loan from the government to buyers of newly built properties worth up to £600,000. Buyers need a 5% deposit. When the property is sold, the government reclaims its loan and will make a profit if the property’s value has risen.
What’s a Help to Buy ISA? This really is free money! Set up an account and you can save up to £1,200 in your first month, then up to £200 a month after that – though the amount you put in each month is completely up to you. When you come to use the funds to buy your first home, (you can’t take it out before then!) the government will top up your savings with a 25% bonus (up to a maximum of £3,000).
“I’m A Buy-To-Let Investor…”
100% Council Tax Premium On Vacant Properties
Landlords will be disappointed that there were no amendments to Section 24 tax relief change, which will continue to be phased in until the 2020/21 tax year.
Interestingly, the Chancellor did announce that councils will now be allowed to impose a 100% council tax premium on vacant properties, to discourage landlords and property investors from allowing homes to sit empty. This will double the current fee, which is capped at 50%.
He stated that it “cannot be right” to allow houses to sit empty while many struggle to find somewhere to live.
He went on to say, “We will also launch a consultation on barriers to longer tenancies in the private rented sector, and how we might encourage landlords to offer them to those tenants who want the extra security.”
What Do The Experts Think?
“Landlords across the country are already feeling under pressure from multiple changes in the private rental sector, so it’s important not to rack up any more costs. The new 100% council tax premium will mean it’s even more important for landlords to reduce voids and make sure their rental properties are continuously occupied.
Using an Airbnb Management service, like Portico Host, is a fantastic way for landlords to fill dreaded voids between tenancies. We can look after the entire short-term rental practice while your property is on the market for a long-term let, ensuring you earn right up until the day you secure a new tenant.” Robert Nichols, Chief Executive Officer, Portico London estate agents.
Discover the Airbnb value of your property!
The government recently announced bans on letting agency fees and caps on rent deposits, and now a further step to improve the private rental sector has been announced: tax incentives for landlords who guarantee tenancies of at least 12 months or longer.
For renters claiming Housing Benefit and Universal Credit over the next two years, Chancellor Philip Hammond has also announced £125m in targeted affordability funding.
The £125m targeted affordability funding is likely to be welcomed by landlords who have been reporting increased arrears among tenants accessing Universal Credit.
If you’d like any more information on the changes announced in the Budget, give us a call on 0207 099 4000. View more London properties for sale.
*Based on a purchase price between £395,000 and £432,500