The Autumn Budget and the Housing Market
A welcome relief comes for property buyers as stamp duty is abolished for first time buyers on property purchases up to £300,000. This will help to revive the housing market, especially for these buyers.
The stamp duty relief came into effect on 22nd November 2017. The chancellor indicated that tax would be cut for 95% of first time buyers and altogether abolished for 80% of them.
First time buyers in property hotspots such as London will see a complete abolishment of stamp duty on the first £300,000 for properties up to a purchase price of £500,000. This will greatly reduce the purchase costs for properties for many first-time buyers in high price areas.
Between the £300,000 and the £500,000 price ceiling, a 5% tax levy will be applied. As the average cost of a first-time house in London costs £479,000, the stamp duty tax relief will result in a reduction of stamp duty of around £5,000.
Although this reduction of stamp duty appears as a step forward, it could also fuel further demand for properties within this price bracket resulting in a further increase in house prices.
The chancellor also set an annual target of 300,000 new homes to be built by the middle of the next decade. This will represent the largest annual increase in housing since 1970.
The ‘use-it-or-lose-it’ policy will target those developers that are sitting on land. Compulsory purchase powers could follow a review which should conclude by Spring 2018. Currently, in London, there are 270,000 residential planning permissions which have not yet been exercised so this could be a good thing for the house building initiative resulting in a reduction of the housing shortage that we are currently seeing.
The Help to Buy Equity Loan scheme which helps buyers with their property purchase will be extended to 2021.
The budget did state that the government will look at ways to encourage landlords to offer longer rental tenancies. We will wait to see what happens here and report accordingly nearer the time.
If you are looking to sell your house, please contact Robert Oulsnam and Company today. If you would like your property valued, please visit our valuation page. If you’d like to come and speak to someone in person, we would love to see you at any one of our offices listed at the bottom of this web page.