From a purely property perspective, the 2017 Budget was hardly ground breaking and criticism would not be unfair when applied to the Budget as a whole. Changes that could affect the residential housing market were in truth few and far between.
No changes were made to the Stamp Duty Land Tax thresholds which was something advocated by many to help kick start the somewhat stagnant housing market. The current rates may not seem a massive issue to some, particularly in the North, but in the Capital with average house prices now somewhere between £500,000 – £600,000 (and some quarters saying around £650,000) you are looking at an average Stamp Duty liability of between £15,000 – £20,000. That’s a hefty sum and first time buyers down south, who admittedly will be paying a lot less than the above for their first properties, will still be paying significantly more Stamp Duty for their first home than their northern equivalents.
Neither was there any relief to the additional 3% SDLT payable on a second residential property which was controversially introduced last year.
There were though some new schemes which could potentially help those on to the property ladder.
The biggest news in the budget is the introduction of the new lifetime ISA. The basics of the scheme are that it is available to all between the ages of 18-39 and opening a lifetime ISA allows you to save a maximum of £4,000 a year into the ISA and receive a 25% deposit on those funds (and that doesn’t include interest which also accrues). The headline figure then is that if you opened an ISA and saved until 50 you would effectively have £32,000 to put towards a first property.
The rules on using the bonus towards a house purchase are broadly the same as the current Help to Buy ISA scheme:
• It must be your first property,
• the value of the property cannot exceed £450,000.00 and
• the funds must be used as a deposit towards the purchase (i.e. you are purchasing with the assistance of a mortgage – so it doesn’t apply to any buy to let property).
The good news is that couples can have one each and both benefit from the bonus although the value of the property would still remain at the £450,000.00 limit. The lifetime ISA also works hand in hand with the Help to Buy ISA scheme and you can have both together although you can only use the government bonus from one of the schemes towards the purchase. The only immediate drawback for buyers is that to put the funds towards the purchase of a property you will need to have had the lifetime ISA for 12 months.
Anybody who wishes to use the lifetime ISA though to purchase the property should realise that this is ultimately a long term investment ISA. If you decide not to purchase a property and you wish to withdraw the funds before the age of 60 (and if you have had the ISA for more than one year) there is a punitive penalty for withdrawing your money. A good starting point for any potential users would be the government article below.
So no real news for investors or those at the higher end of the market but some small relief for those trying to get on to the property ladder.
