Two days before Halloween the chancellor announced his Budget. It was never expected to be full of surprises, all eyes and minds are firmly focussed on Brexit, and there was no room for disappointments or big announcements to distract the focus.
So what were the main announcements from a property perspective?
A: Help to Buy: The government has extended its Help to Buy Equity Loan Scheme until March 2023 but is limiting it to first time buyers and introducing regional caps. Like it or hate it, it is here to stay and it does help prop up the market. Put it this way, removing the scheme could cause the first time market to really struggle, possibly collapse; but we don’t have that to worry about now.
B: Stamp Duty: the stamp duty exemption threshold for first-time buyers will rise to include properties worth up to £500k. All positive.
C: Principal private residence tax calculations: There has been a change in these, which are somewhat complex. Essentially, the restrictions apply to capital gains tax where properties were once a Landlord’s Principal Private Residence. Landlords can only qualify for living in the property for the last 9 months’ of ownership (down from 18 months). Additional relief of up to £40,000 of gains not taxed on landlords because they used to live in the property will also be restricted to those who maintain shared occupation with their tenants. In fairness, the relief has always seemed generous and this new measure aligns well with the intention of PPR benefiting owner occupiers
D: Non residents: The Government also said it will publish a consultation in January on a Stamp Duty surcharge of 1% for non-residents buying residential property in England and Northern Ireland. This might have a further negative effect on the London market in particular.
In conclusion, none of the announcements are particularly dramatic. It is positive for the market, as a whole, that the “help to buy” scheme will continue for the next 5 years, the other announcements will not affect the majority of landlord investors.