Will Chancellor Hammond’s plot cause the property market to sparkle, or will it blow up in his face?
Given that the Autumn budget is the last edition before Brexit, it is understandable that the housing market was not its central feature.
The Chancellor, Philip Hammond, has previously declared that “the government is determined to fix the broken housing market”. To cause the market to boom, he feels there must be more investment – with more new homes, and measures for first-time buyers, owning a property will become more accessible for all.
The recent budget therefore includes several provisions to this effect.
Hammond’s budget will attempt to address the housing crisis through investment, by ensuring that the government 'Fawkes' out £500m to the Housing Infrastructure Fund. This pot of money can be accessed by local councils, and is intended to build 650,000 new homes. This will be supplemented by new partnerships with nine housing associations to deliver an additional 13,000 new homes. There may also be an explosion of house-building by local authorities, as their borrowing cap has been lifted.
First-time buyers receive plenty of positive news in the budget. The Help To Buy scheme, for example, was intended to fizzle out in April 2021, but has now been extended until March 2023. This gives first-time buyers a further two years to take advantage of the programme and launch themselves onto the property ladder, although after April 2021 there will be regional caps on the size of the equity loans available.
This initiative is supplemented by an extension of the Stamp Duty Land Tax exemption. Before the budget, first-time buyers who bought properties worth up to £300,000 did not have to pay the tax. The cap has now been lifted to include all first-time buyers purchasing shared-ownership properties up to the value of £500,000. This applies even to those who have purchased since last year’s budget in November 2017.
These measures combine to provide excellent opportunities for first-time buyers. Investment in building will rocket, increasing the supply of housing, while buyers can get more bang for their buck as many will no longer need to pay stamp duty. The extension of the Help To Buy scheme will mean that these benefits are felt for years to come.