Stamp duty rise on investors & extended schemes to help first time buyers in Autumn Statement
The Chancellor recognises buy to let is squeezing out families who can't afford to buy and introduces HomeOwners Alliance policy calling for a higher rate of stamp duty for investors. This and more news from the Autumn Statement and what it means for homeowners.
November 25, 2015 | post last updated on August 31st, 2016
The Chancellor today doubled the housing budget to £2 billion per year and announced in the Autumn Statement “the biggest affordable housebuilding programme since the 1970s” claiming “we are the builders”.
Stamp Duty on Second Homes
The Chancellor announced higher rates of stamp duty on the purchase of additional properties like buy-to-lets and second homes. Here at HomeOwners Alliance HQ we’re pretty chuffed to see this policy change being adopted. That’s because back in 2013 we submitted a report to the Treasury ahead of the Autumn Statement (read it in full here) arguing for a new rate of stamp duty for property investors to pay for a cut in stamp duty for homeowners.
Why? Because time and time again we see first time buyers directly competing with cash rich property investors, and they don’t stand a chance (read this for example). So this is good news to help rebalance the inequality in the system. We would though argue to see “all” rather than “some” – as suggested by the Chancellor today – of the money raised being reinvested to help first time buyers from London to Cornwall and beyond who are priced out.
Under stamp duty rules that took effect last year, following our campaign for a change to the way stamp duty is calculated, you pay different rates for different proportions of the property price. This will mean that the following additional property stamp duty rates will apply on each portion of the purchase price on buy-to-let and second homes from April next year.
400,000 Affordable new homes
The Chancellor promised 400,000 affordable new homes by the end of the decade. Almost half of them will be Starter Homes, sold at 20% off market value to young first time buyers while 135,000 will be brand new Help to Buy: Shared Ownership which the Government also announced today. These are explained below.
“Once again the Government has shown what a great job it does of announcing the numbers of new homes it will build. While we are pleased they are taking the housing crisis seriously, it will take a long time to dig us out of this hole and only time will tell if they can deliver.
In doing so, the Government needs to avoid creating the problems of tomorrow. Homebuilding is not just a numbers game; we need quality homes in the right places and at the right price. We can’t have tax payers money ploughed into poor quality homes. And developers are pretty much self-regulating which calls into question whether they are delivering homes to a high standard and taking care of their customers. Government should use its might to improve the quality of housing and the way some developers treat their customers. “
Starter Homes: First-time buyers will get a 20% discount
This policy featured in the Conservative Party manifesto so isn’t new. Starter Homes are new build homes available at 20% off the market price. They are only open to first-time buyers under 40. You can register to find out about Starter Homes in your area. £2.3 billion will be spent on building 200,000 Starter Homes over the next five years. This money will be given to house builders to provide a 20% discount on new homes.
Help to Buy Shared Ownership
Shared ownership allows people to buy a share of a home – rather than the whole house – and then buy a greater share over time as they can afford to. They pay rent on the rest of the property. Currently, these are allocated in several different ways including criteria set by local councils, for example whether potential buyers work in the local area or if they are already in council housing.
From April 2016 Help to Buy Shared Ownership will lift the limits so that anyone who has a household income of less than £80,000 outside London, and £90,000 inside London, can buy a home through shared ownership. Only military personnel will be given be priority over other groups. The scheme will apply across England.
People can buy a share between 25% and 75% of a home. The rent on the rest of the property won’t be more than 3% of the amount left. For example, on a house worth £227,000 where the buyer has bought a 40% share, the rent won’t be more than 3% of the remaining 60% – in this case £4,000 a year, or £340 a month.
London Help to Buy: government loan of 40%
Help to Buy Equity Loans are already open to both first-time buyers and home movers on new build homes in England with a purchase price up to £600,000. Currently, if you’re able to pay at least 5% the value of your home as a deposit, the government will lend you up to 20% of the rest of the value of the property, alongside your mortgage of up to 75%.
Equity Loan will now be available until 2021. And, to reflect the current property market in London, from early 2016 the government will increase the upper limit for the equity loan it gives new buyers within Greater London from 20% to 40%.
With London Help to Buy equity loan:
- you’ll need to contribute at least 5% of the property price as a deposit
- the government will give you a loan for up to 40% of the price
- you’ll need a mortgage of up to 55% to cover the rest
More information on how to use London Help to Buy will be available in early 2016 – sign up to our monthly newsletter to be kept informed
Accelerating Housing Supply
The Chancellor also announced plans to “accelerate housing supply”. The list sounded long and a little vague, including further reforms to the planning system so it delivers more homes more quickly, the release of public land suitable for 160,000 homes and re-designating unused commercial land for Starter Homes. It also includes the extension of loans for small builders, regeneration of more run-down estates and investing over £300 million in delivering at Ebbsfleet the first garden city in nearly a century (which has been stalled for some time).
Right to Buy
Currently, most people who rent a council home have the right to buy their home from the local authority. There are discounts on the home price available in many cases, depending on how long people have lived there. The Right to Buy will now be extended – as outlined in the Conservative manifesto – to housing association tenants during 2016, giving 1.3 million households the chance to become home owners. The new announcement here is that a small number of housing associations will be piloting the scheme, starting midnight tonight.
Councils to receive an additional £10m to help homeless people
The Temporary Accommodation Management Fee will no longer be paid through the benefits system – instead, councils will receive £10m a year more, upfront, so they can provide more help to homeless people.