The prime London property market continues to challenge buyers and sellers alike, as we expect to be the case going forward in 2018. Last week, we saw chancellor Philip Hammond announce his budget statement, which offers little for the majority of those in prime London. Brexit negotiations continue to go back and forth, which is arguably the underlying issue affecting buyer sentiment. That said, transactions are taking place where vendors are being advised correctly and therefore pricing sensibly. The current market therefore offers some excellent opportunities for buyers looking to hold onto property in the medium to longer term.
After much anticipation, housing was the focal point of the Chancellor’s 2017 Budget, particularly the news of the abolition of stamp duty for first-time buyers on properties priced up to £300,000. The housing crisis, as in the shortage of availability, is considered one of the biggest issues of our time and the Conservative government was under a lot of pressure to deliver some solutions. The Treasury has now allocated £44 billion to housing over the next 5 years with would-be home buyers the beneficiaries of the plans outlined by Philip Hammond. However, many industry experts are arguing these measures are not sufficient given the pressure of rising house prices, high rents and stagnant wages. Below we have outlined the 4 key areas:
1. Stamp duty changes for first-time buyers
Stamp duty is now to be abolished for all first-time buyer property purchases up to £300,000, with effect from November 22nd when the budget was announced last week. This equates to a £5,000 saving on the average price of first homes in London and will come as a small relief to those struggling to save up for deposits and stamp duty. In addition, stamp duty relief will also be available on the first £300,000 of the purchase price of properties up to £500,000 in areas such as London, again for first time buyers. The portion of the house price between £300,000 and the £500,000 price ceiling will be taxed at 5%.
“First-time-buyers should think about acting quickly to take advantage of this stamp duty ban, before the extra demand it creates pushes up prices and starts to eat away at the extra cash this stamp duty exemption will free up,” says Rightmove director and housing market analyst, Miles Shipside.
The Treasury calculate these changes will reduce property tax for 95% of first-time buyers and means that 80% of first-time buyers will pay no stamp duty at all. However, what it won’t help is the fact that in England, average house prices are almost 8 times the average worker’s salary, while in London they are nearly 12 times.
2. 300,000 new homes to be built per year by 2025
This will be the biggest annual increase in housing supply since 1970. Hammond outlined building programmes that focus on urban areas where people want to live and where the most jobs are created, with the aim of building good quality, high-density homes in city centres and around major transport hubs. The government also aims to increase the supply of land by unlocking strategic sites and urban regeneration schemes. On top of this, the Housing Infrastructure Fund will be doubled, and the Housing Revenue Account (HRA) caps, which limit the amount councils can borrow to build new homes, will be lifted.
3. Extension of Help-To-Buy scheme
The Help to Buy Equity Loan scheme, which offers a 5 year loan of up to 40% in London on new build homes costing £600,000 or less, was initially scheduled to close in 2020. Last month, Theresa May promised an extra £10 billion to extend the scheme until 2021 and this was confirmed in the Budget.
4. Longer rental tenancies
Although Mr Hammond acknowledged the biggest barrier to buying was saving for a deposit, renters were largely overlooked in this Budget. However, he announced the government are looking into ways to encourage landlords to offer longer rental tenancies, providing more security to those that seek it.
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