The Budget – What you need to know.
Today’s budget had a lot to say about housing supply, housebuilding, planning reform and help for first time buyers.
Quite how the amounts of money pledged and the new more ambitious targets for new housebuilding will all work out remains to be seen. In some ways, we have heard much of this talk before – and Government housebuilding targets roll easily off the tongue but never get achieved.
One announcement that we can quantify is the decision to axe Stamp Duty for First Time Buyers purchasing property in England and Wales, up to a maximum of £300,000. In reality, this tax abolition amounts to a saving of £1,500 on a first-time purchase at £200,000 and a maximum saving of £5,000 for first steppers buying at £300k. So, it is a valuable saving, but for most people probably not making the difference between being able to buy or unable to afford to buy at all. At a purchase price of £150k the saving is only £500.
In London first time buyers purchasing property up to a value of £500,000, will only pay stamp duty on any amount over £300,000, which means they will also benefit from the cut.
The change applies from tomorrow, so if you have exchanged contracts but not completed yet – Good News! You will get the saving. However, the budget needs to pass through Parliament and be enacted into law so in the short term you may find you must pay the old stamp duty rates and then claim it back. Talk to your lawyer as soon as possible if you are mid purchase right now.
What else does todays budget mean for housing and house prices?
Many first-time buyers are buying new build property using the Government Help to Buy scheme. This will no doubt continue, made a little easier by the stamp duty reduction. Good for house builders, and if it underpins demand for new homes, it will help builders to keep their prices up.
More first-time buyers, with slightly larger budgets, is also likely to see prices underpinned in the second-hand market too. With buy to let investors still in short supply, sellers of flats and starter homes rely on the FTB’s to keep the market moving.
Overall, the budget did little for short term housing supply. Stamp duty costs for second steppers and for more expensive homes still act as a drag on supply and apply upward pressure to house prices. Older people have very little incentive to downsize, freeing up family homes and keeping the market well supplied. So, expect very little change in the market from today’s announcements. First time buyers will probably end up paying slightly higher prices and the overall lack of supply means rising house prices remain the norm. All good news for house builders though.
So, in summary: –
- The Stamp Duty changes are welcome but not ground-breaking;
- Check with your solicitor if you are a FTB in the middle of a move – you may still have to pay the old rates until the budget is enacted;
- House prices for first time buyer properties are likely to harden up a little;
- Overall, we expect house prices to keep gently rising.
If you would like an individual, confidential discussion about your home or the effect of the budget please do get in touch with me.
Our advice is free but could save you ££’s.