Christmas Come Early for First-Time Buyers?

‘Tis the season where the Chancellor Philip Hammond brushes off his red briefcase and announces the Autumn budget. Our Solicitor Richard Collins breaks it down.

Hammond bestows gifts and favours on those he deems most worthy, whilst threatening lumps of coal for those he does not. In previous years the Budget has been heavily focused on the housing market and this year has been no exception. The headlines for the 2017 budget is are;

• The Government is to legislate on a proposed 100% Council Tax premium on empty properties;
• Aims for 300,000 new homes (annually) promised until the mid-2020s;
• Review commissioned into the reasons why planning permissions granted don’t turn into developments;
• £44bn for capital funding and loans promised to be promised over 5 years to boost House Building;
• Stamp duty exemption for first-time buyers on all property purchases up to £300,000.00 and the first £300,000 of properties in London (up to £500,000.00).

Although details are still sketchy so soon after the announcement, we can expect that the plans are aimed at continuing the government’s objectives on addressing the shortage of affordable homes for the young and the first time buyers, whilst also making the acquisition of a buy-to-let portfolio significantly more unappealing to your average investor. We’ll reserve judgement on whether the Chancellor’s plans will achieve this ambition (and we’ll leave the discussion as to if this the correct course in any event until further details are available). One thing that we can be certain of is that if the Chancellor’s proposals have half the impact of these previous initiatives, it may be a good time to obtain some specialist legal advice if you are planning a home purchase.

Talking locally about the news that stamp duty will be exempt for first-time buyers on properties with a value of £300,000 and under, Property Solicitor Richard Collins states:

“The government has yet to provide guidance on the areas that will qualify for the assistance on properties sold for over £300,000.00. If the model reflects the current Help to Buy designations not all of Essex will qualify but Havering could be included. We are currently waiting for the government to provide guidance on the specifics of the plan and will keep all our buyers updated as new information becomes available.”

 

The increase in stamp duty for second homes

George Osborne’s much publicised 3 % tiered increase in stamp duty for second homes announced in 2015 led to a sharp increase in buy-to-let sales being pushed through prior to the deadline but the benefits to the market have been offset by an immediate slowdown thereafter.

The reduction in tax credit for landlords

Changes to the way in which higher rate earners buy-to-let properties were taxed resulted in many investors becoming unable to offset all their mortgage interest against their profits. Within three years of the changes introduced earlier this year, none of the interest will be tax-deductible making the prospect of owning a buy-to-let portfolio significantly more unappealing.

New homes targets

Progressive governments have sought to alleviate the pressure on first-time buyers by increasing the dwindling stock of first-time properties to buy. Critics argue that making targets are easy, however meeting them has proved significantly more difficult.

Help-to-buy homes and ISAs

Previous budgets revamped the existing Help to Buy ISA with a new Lifetime ISA for young people under 40 that paid a 25% bonus to younger people saving towards their first home meaning with a £4,000 annual saving, savers receive a £1,000 government bonus. This runs alongside the Help to Buy Equity Loans where the government offers 5 years tax-free loans to first-time buyers struggling to get sufficient mortgage finance to purchase a new property. 

MORE INFORMATION 

To understand more about how the Autumn Budget proposals may affect you, either as a first-time buyer, homeowner or landlord, please contact a member of our Residential Property team for impartial legal advice. Call on 01708 229444 or email us using our contact form.This article was written by Richard Collins, Solicitor at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of November 2017.