Chancellor of the Exchequer, George Osborne, has unveiled a series of measures to boost the property market and strengthen the economy. The key changes are highlighted below:-

Housing

Housing Budget to be double by the Government with a plan to build 400,000 affordable new homes by 2020 which includes:–

  • £2.3bn extra for developers to build starter homes for first time buyers
  • £4bn into shared ownership scheme – these properties are aimed at households earning less than £80,000 (£90,000 in London) to assist them in getting onto the housing ladder
  • £200m used to build homes to rent which will assist tenants in saving for a deposit
  • New pilot schemes launched with 5 housing associations to allow tenants to buy their own homes
  • The current Help to Buy scheme across England will be extended to 2021, one year longer than initially planned

Stamp duty and Buy-to-Let

Stamp Duty for Buy-to-Let Landlords and people buying second homes will increase by 3% from April 2016.  For a property worth between £125,000 and £250,000, the stamp duty is currently 2% but buy-to-let landlords will have to pay 5%.  £60m of the money raised from this surcharge will be put towards helping home buyers in England where holiday homes have caused an increase in local prices.

Capital Gain Tax (CGT)

Previously vendors had between 10 and 22 months after the sale of a property to pay CGT.  By 2019 this will need to be paid within 30 days of the sale completing. This change will coincide with the introduction of digital HM Revenue & Customs systems. The new system will enable CGT tax payers to manage and view their tax affairs in real time, with digital tax accounts for all small businesses and individuals to be made available.

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Comments by Simon Bentley – Senior Partner

Here at Mundys we feel that the continued investment in affordable homes is great news for the housing market as it will enable more first time buyers to get on the property ladder.

The stamp duty changes for buy-to-let and second home purchases is a surprise and could see potential investors reconsidering if property is still the best form of investment.  A buy-to-let property purchased for £150,000 would see an increase in the cost of stamp duty of from £500.00 to £5000.00 in April 2016.  It is our initial opinion that this increase will not lead to a fall in buy-to-let investors as I am sure most still look at properties as a long term investment with great potential capital growth.  However, there could be a rise in buy-to-let purchasers prior to April 2016 and we could see rental increases from April 2016 as Landlords may try to recoup the extra costs involved with their purchase.

As ever, if you require any advice regarding the property market or purchasing a home or buy-to-let investment, please do not hesitate to contact me or any member of the Mundys’ Team.