Following the Chancellor’s Budget announcement last week, these are the key issues in terms of property and housing:
Stamp duty – first time buyers
There is to be a relief for first time buyers of residential properties costing no more than £500,000. First time buyers will pay no SDLT on the first £300,000 of the purchase price, with the remainder being charged at 5%. No relief will be available where the total consideration exceeds £500,000.
The relief will come into play immediately and will apply to transactions with an effective date on or after 22 November 2017, although the Welsh government will have to decide whether to continue it when stamp duty is devolved in April 2018. It will not apply in Scotland unless the Scottish government decides to follow suit.
It is believed that 95% of all first-time buyers will benefit, with 80% not paying any stamp duty.
Stamp Duty– higher rates and reliefs
New measures will be introduced to offer a relief against the higher rate of SDLT in certain cases. The new measures will:
- prevent abuse of relief for the replacement of a purchaser’s only or main residence by requiring the purchaser to dispose of the whole of their former main residence (and to do so to someone who is not their spouse)
- display the higher rates where an individual buys a property from their spouse or civil partner
- disregard certain interests retained by a former spouse or former civil partner upon dissolution of a marriage or partnership – (it disregards an interest if it is held under certain ‘property adjustment orders’, for example in the case of a divorce)
- make changes so that a property held by a child’s parents is disregarded when a property is purchased by a child’s trustee pursuant to power conferred on the trustee by a relevant court appointment.
Stamp Duty – filing deadline
For transactions taking place on or after 1 March 2019, the SDLT filing and payment window will be reduced from 30 days to 14 days. No immediate concerns, but just something to be aware of for the future!
Funding boost for new homes and construction projects
The Chancellor commits to £44bn over five years for housing through capital funding, loans and guarantees. That follows reports that Communities Secretary Sajid Javid had pushed for an extra £50bn to tackle the housing shortage. Mr Hammond says the funds will include an extra £2.7bn to more than double the Housing Infrastructure Fund. The funds are expected to go some way towards meeting the target of building 300,000 new homes a year by the middle of the next decade.
Whilst it is impossible to please everybody, this Budget will certainly be viewed more positively than last year’s!
This blog post was written by Shazan Miah, associate, Real Estate.