Contributed by Attwells Solicitors
25/03/2020 - Attwells Solicitors
In the awake of the Coronavirus pandemic and in a post-Brexit environment supporting first-time buyers was probably less pressing for Rishi Sunak’s budget. The result was an emphasis on spending plans, fulfilling election promises and managing the fallout from Coronavirus.
The Spring Budget was certainly disappointing for first-time buyers. The phrase was never mentioned. Any assistance in getting on the property ladder in the spring budget seems to come with a cost and may not be the help that many were hoping for.
There were expectations that Stamp Duty would be reformed to help people onto the property ladder. Currently ranging from 0% on homes under £125k to 12% on homes over £1.5million it can add a considerable lump sum to any home purchase. The 0% threshold may seem reasonable until you realise that the average price of a UK property now sits at £233k – with new build properties considerably higher. There is a different approach for first-time buyers: no stamp duty up to £300k, then 5% up to £500k, with the £300k allowance. If a first-time buyer purchases a property over £500k then normal rules apply.
So why is a first-time buyer interested in stamp duty? Having the thresholds set where they are, compared to housing prices, can result in a blockage of available properties. It can prevent people leaving their starter home and moving up the ladder because of the additional funds they need to find to pay the stamp duty.
However, there is additional help for First Time Buyers.
The base rate dropped by half a percent to 0.25%. This will influence mortgage rates and make monthly repayments more affordable. The flip side is that if you are currently saving for a deposit, you are likely to get less interest on your savings.
The Affordable Homes Programme (AHP) received a £3 billion boost on previous promises, bringing it to £12 billion. This is the largest cash investment in affordable housing in a decade so it seems that housing stock will be available. The AHP will provide a mix of rented and purchased homes, with the emphasis on ownership.
There was no mention of the First Homes Scheme. The consultation is due to close on 3 April. The scheme will give purchasers 30% off purposely-built homes with priority given to ex-military and public sector key workers.
With the average age in London of a first-time buyer being 37 years, it was hoped that the Budget would deliver more. A reformed Help to Buy scheme, or relaxed deposit limits, along with changes to stamp duty had been anticipated, but it’s likely we will need to wait until the November budget for these announcements now.
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