I always look forward to the Budget. I know it’s a bit sad, but I love the way the whole thing plays out, the jeers and “here here’s”, even the lame jokes. However, in all honesty, this afternoons episode is an hour and a bit of my life that I won’t get back, as all the promises around Housing being the centre point of the Budget faded into blandness.
This time the key phrase being repeated was that “the hard work of the British people” had paid off and “Austerity is coming to an end but discipline will remain”.
As the Chancellor himself mentioned, most of his “Star bunnies” had already been released or at least pretty openly discussed so there was not a whole host of large announcements. The biggest announcement from a housing point of view was around Stamp Duty for First-Time Buyers purchasing a Shared-Ownership property. Last year, the chancellor raised the 0% stamp duty threshold to £300,000 from £125,000 to help first-time buyers and this will now be extended to cover those purchasing Shared Ownership properties up to the value of £500,000.
What is unusual about this is that it will be applied retrospectively. So, if you have purchased a property in the past year you should be able to apply to get some or all of this duty refunded. I have not seen full details around this yet so it is worth investigating further.
Most of the details where our industry is concerned were in the accompanying Budget documents rather than the speech itself.
It was inevitable that an extension to Help to Buy was going to be made given the reliance on the scheme that was initially meant to be a short-term fix.
A new scheme will be introduced from March 2021 for 2 years which will follow the same basis as the current scheme with two important changes. The new scheme will be available for first-time buyers only, and for houses with a market value up to new regional property price caps. These caps are set at 1.5 times the current forecast regional average first-time buyer price, up to a maximum of £600,000 in London.
It is hoped that these changes will go some way to alleviate criticism that the scheme helps to artificially increase house prices and line the pockets of builders. The statement that there is no intention of introducing another scheme after March 2023 gives notice that the industry needs to start weaning themselves off this particular drug. It will be interesting to see whether mortgage lenders will be prepared to lend borrowers up to 95% Loan-to-Value on New Build Flats in the future.
Also found in the Budget documents was more information on proposed increases in tax for Foreign buyers. HM Treasury said: “The government will publish a consultation in January 2019 on a SDLT surcharge of 1% for non-residents buying residential property in England and Northern Ireland.”
There was also another proposed change to landlords and lettings relief on Capital Gains Tax (CGT). The document states that “From April 2020 the government will reform lettings relief so that it only applies in circumstances where the owner of the property is in shared occupancy with the tenant…The final period exemption will also be reduced from 18 months to nine months.”
Of course there was the usual items around Tax and Investment, but after sitting through this budget, at least beer and spirits are not going up!
Meanwhile, the mortgage market is still proving to be competitive and it does seem that the levels of enquiries have increased over the past couple of weeks. Mortgage lenders have seen an increase in business which means service from some lenders is running behind so it is important to consider service as well as price.
Although some mortgage rates have been sneaking up over the past week, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.38%, (4.52% APRC) and 5-year fixes from 1.82%, (3.62% APRC) whilst variable tracker rates are around from 1.32%, (4.69% APRC).
Those looking at Buy-To-Let mortgages can still obtain products from just 1.29%, (5.39% APRC) for a 2-year tracker or 5-year fixes are available from 1.99% (3.62% APRC).