UKBA logo dark

The Autumn spending review relating to property

By Lauren

Landlords and Second Home Levy

New 3% surcharge on stamp duty for buy-to-let properties and second homes from April 2016, raising about £1bn in England and Wales will have to pay a 3% surcharge on each stamp duty band. George Osborne said the new surcharge would raise extra money. This change, would “choke off” investment in rented properties for the small investors and those who are thinking about investing as a pension plan for the future. This is likely to turn many new and existing landlords away from the sector and reduce the number of homes to rent and almost certainly driving up rents for the millions. Higher rents make it even less likely that those on low or modest incomes will ever be able to raise the deposit required to realise their dream of home ownership, despite new Help to Buy ISAs or capital loans for Londoners that were unveiled in the Autumn spending Review– first-time buyers will still need to find around 5% of the total purchase price as their share of the deposit.”

Help to Buy

London Help to Buy scheme to offer interest-free loan worth up to 40% of the value of a newly built home. With any government initiative normally has a positive impact to house prices unless the demand falls but realistically we won’t see any real price drop in London. First-time buyers have fuelled increased activity in the mortgage market this year; with its commitment to building more starter homes it’s clear the Government is keen to boost the supply of affordable houses and help London buyers with their first deposit – buyers must also have access to financing to secure these homes. We fear many first-time buyers in particular will suffer from the negative impacts of an EU Directive that will likely mean mortgages become more difficult to obtain. The new Help-to-Buy ISA is finally coming into effect, but with many lenders still yet to announce their products, there are many uncertainties about how these products will work, what sort of value they will offer and how long the incentives will last. The maximum Government top-up of these ISAs will be set at £3,000, which in London at least will not get you very far.

New Homes

Plans to hand billions to private developers to build 400,000 new homes in England with planning reform the government had doubled its budget so that it can meet the target. The pledges of extra 400,000 homes will be built by 2020, promising more public land and brownfield sites will be freed up for development and that the planning process will be simplified. Therefore, maybe some green belt developments will be identified through planning reform.

We certainly welcome the Government renewed focus on the need to build almost half a million extra homes and steps to making home ownership more affordable. However, the money set aside for that could well be in jeopardy unless something is done to address this alarming tax shortfall caused by the new Stamp Duty system that’s also damaging large swathes of the house sales market. Therefore, there is a need to review the stamp duty system and its caused the property marketing stalling in some parts of the country and losing something of £750M since the introduction.

Easing Planning Restriction

Restrictions on shared ownership to be removed and planning system reformed to deliver more homes which will help house builders meeting the government building target. Developers urgently need more land to build on, especially in London, and an easing of planning restrictions and red tape that are discouraging developers of all sizes from delivering more new homes, so the Chancellor must ensure these measures are introduced without delay. There should also be added incentives and innovative new models for the build-to-rent sector. A separate use-class might tempt investors, while the USA model that sees prospective tenants effectively rent ‘off plan’ could also work over here. The public sector should also more frequently develop in ‘joint venture’ with the private sector, sharing risks and costs to get schemes under way, then reaping the benefits when the homes come to market.

Need advice & guidance?

We have advisors all over the UK. Get in touch today for expert guidance and support.