2017 Budget: your property summary
The feeling of trepidation faced by buy-to-let landlords and first time buyers whilst waiting for the 2017 budget can now be put at ease. Please see below a brief summary of the Chancellor's budget and how it will affect the property market in 2018.
It’s a very Merry Christmas and a Happy New Year for first time buyers!
Effective immediately! All first time buyer purchases up to £300,000 will have no stamp duty to pay. This will make a significant impact on first time buyers across the country and will help many to take their first steps on the property ladder!
How do you know if you are an eligible first time buyer?
The government has set a definition of ‘first time buyers’ and those who will be eligible for this scheme. The definition states that…
“In order to count as a first time buyer, a purchaser must not - either alone or with others - have previously acquired a major interest in a dwelling or an equivalent interest in land situated anywhere else in the world.
“This includes previous acquisitions by inheritance or gift or by a financial institution on behalf of a person under an alternative finance scheme.
“Relief is not denied by virtue of a previous acquisition as a trustee unless the purchaser was also a beneficiary of the trust.
“Relief is also not denied if the purchaser owns or has previously owned non-residential or mixed-use property, as long as that property did not include a dwelling.
“This restriction does not apply where the interest acquired was the grant or assignment of a lease with less than 21 years to run.
“If the property is purchased jointly, all the purchasers must meet these conditions.”
Countrywide has produced research which shows that the average price paid by first time buyers is below £300,000 in every region of the country outside of London.
East Midlands - £164,371 (proportion of FTBs buying below £300k = 97%)
Buy-to-let landlords breathe a small sigh of relief
Buy-to-let landlords were glad to have been left out of the Chancellor’s speech, after recent government announcements have seen their tax breaks disappearing and increased costs. However, there was no change on the 3% stamp duty which was introduced in April last year on the purchase of additional homes.
More funding for new homes
It was no surprise that this was again a hot topic during the Chancellor's speech. A new target to build 300,000 homes a year until the mid-2020's was announced. An increase from the 275,000 a year we were promised in March. He went on to say that this would mark the biggest annual increase in housing supply since the 1970's. (again something we already knew from the Housing White Paper).
The Chancellor also pledged £44bn of capital investment and measures to get ‘building projects started’. These measures include shortening the time it takes to obtain planning permission and extra funding for the 'Home Builders Fund' to help small developers to begin building homes again.
Promises for longer-term rentals
One thing which could have a significant effect on landlords in the future is that the Government wants to launch a consultation to ‘break down barriers’ around longer term tenancies within the private rented sector. When we have more details on this we will produce another post.
Business rates on commercial property
If you own or rent commercial premises and pay business rates, they may have increased after the Government deferred revaluation in April of this year. But this Budget could offer you some compensation.
From April 2018 the calculation of business rates will use the CPI (Consumer Price Index) measure of inflation. Valuations are currently based on RPI (Retail Price Index).
Changes for people with empty property
Another concern for landlords and property owners is that the Chancellor also announced a crackdown on empty properties. He said he will give local authorities the power to double the council tax premium on empty property from 50% to 100%. This will be part of new legislation though it isn’t effective immediately.