The Chancellor addressed a wide rang of issues to do with the property market, with the new Stamp Duty dominating discussions.
The Chancellor George Osborne took to the dispatch box yesterday to assure the Commons and the public, that we are on the right course. He spoke of tax cuts for working people, fuel duty, the expansion of devolution and a lot more. But what did he say about the current state and future of Britain’s property market? Here are all the issues at a glance and what they will mean for 2016.
1. Stamp Duty
It’s a topic which has been on everyone’s lips with many viewing it as an attack on the buy-to-let market and small-time landlords. But what do the changes mean? As of next month, those who buy second homes will pay an extra 3 per cent on a second home worth up to £125k, 5 pc for those between £125 – £250k and 8 pc for those priced between £250 – £925k; increasing in a sliding scale. In practise, this means that if your first home was worth £300,000 an you bought a second home worth £110,000 then you would have to fork out a whopping £8,300 in stamp duty; enough to put many off the idea of venturing into the buy-to-let market. But larger companies did not escape the Chancellor’s gaze as he announced that the new stamp duty hike will include them as well. Some hoped that those with portfolios or more than fifteen properties might be saved however this not the case and could potentially stall future investment in the build-to-rent market in Greater Manchester.
2. Life-time ISA
As we live and work longer many are fearing their eventual retirement but increasingly millions are worried more about trying to buy their first home. The changes being made to ISAs aim to help reduce these concerns and give savers a flexibility which as yet they have not had. Mr Osborne said: ” You don’t have to choose between saving for your first home, or saving for your retirement, with the new Lifetime ISA the government is giving you money to do both.” From April 2017 savers will receive a 25 per cent bonus from the government on every £4 they put in. You will be able to put a maximum of £4,000 a year with the government topping this up by up to £1,000 until the age of 50. And the amount that can be deposited in all ISAs will rise from £15, 240 to £20,000. On top of this, those savers who have already taken out a Help-to-Buy ISA -which will end in November 2019 – will be able to move their money into a new lifetime account. Partner at Kennedy Street-based Birchall Blackburn Law, Michael Foxford, said: “This is significant for first time buyers and it ought to enable people to get on the ladder. “People are likely to start their ISAs at a younger age but it should mean they are in a position to buy their first home before they are 40 – without this that’s where we would’ve been heading. First time buyers need this help.”
3. Flood Defences
Due to the destruction it caused this was an obvious topic for yesterday’s announcement. However, Mr Osborne made no mention of the North West in his speech, despite name checks for Leeds, York, Calder Valley and Cumbria. In December last year, homes and businesses in Rochdale were hit by floods after 35.4mm of rain fell in just 12 hours. Despite this however, the announcement of an extra £700m to spend on defences, which will come from the increase of half a percent in the standard rate of Insurance Premium Tax, may help increase the value of properties in the worst affected areas and at the same time bring down the cost of insurance for homeowners.
4. New Homes
The housing crisis is one of the most important of our time and with Greater Manchester falling far behind the 10,000 new homes needed every year to meet demand, the government needed to offer a plan of action. Osborne insisted that the money being saved in stamp duty changes will go towards helping community trusts. However, Osborne says £20m of the fund will go towards helping families onto the housing ladder in the South West of England. Mr Osborne said: “And it’s proof that when the South West votes blue, their voice is heard loud in Westminster.” A nice soundbite for Tory voters in the South West, but very little to satisfy young house hunters in Manchester. He then ventured into uncommon territory, speaking about the growing problem of homelessness. His solution was to pledge a new £100m fund to help fight it across the UK to provide affordable accommodation for people leaving hostels before they find more suitable housing; potentially creating 2,000 more beds.
5. ‘Airbnb tax relief’
The government here has it seems caught up with the public in noticing the importance of the online property market, as Mr Osborne introduced two new tax-free allowances each worth £1,000 a year, for both trading and property income. Mr Osborne said: “We’re going to help the new world of micro-entrepreneurs who sell services online or rent out their homes through the internet. There will be no forms to fill in, no tax to pay – it’s a tax break for the digital age and at least half a million people will benefit.” This means that those looking to rent rooms online to help support their incomes will feel a real-terms benefit in their pockets.