Key property measures in 2015 Autumn Statement

Key Highlights
• 400,000 new affordable homes to be built with FTB’s able to get 20% discount on 200,000 Starter Homes
• Tenants of 5 housing associations can now use their Right to Buy
• New stamp duty rate for BTL investors and second home owners
• House building firms still lead the way in London’s FTSE 100 index
• Help to Buy shared ownership restrictions to be removed
• London Help to Buy scheme to be launched in London

On Wednesday 25th November, George Osborne delivered his Autumn Statement and Spending Review. The Autumn Statement set out the state of the economy and signalled tax and welfare plans, whilst the Spending Review announced the Government’s plans to cut down its spending over the next five years. With the subject of home ownership always at the forefront of Osborne’s plans, today’s announcement did not disappoint. Combined with the fact that house building firms still lead the way in London’s FTSE 100 index, builders should be encouraged more than ever before to build more properties.

The key measures announced were: 

1. Increased housing budget to allow for 400,000 homes to be built.
The housing budget has been doubled to £2bn a year and will deliver 400,000 affordable new homes, to buy as well as to rent. Half of those will be Starter Homes, which are homes available at 20% off the market price, available only to buyers under the age of 40.

Meanwhile, 135,000 of the properties built will be Help to Buy shared ownership homes. This scheme allows people to buy a share of a home, rather than the whole house, and then buy a greater share over time when they can afford to, paying rent on the rest of the property. From April 2016, current restrictions on who can do this scheme will be removed, allowing anyone who has a household income of less than £80,000 to buy a home through Help to Buy shared ownership.

2. New stamp duty rate for BTL investors and second homeowners.
From April 2016 people purchasing additional properties such as buy to let properties and second homes will pay an extra 3% in stamp duty. This has been introduced as more and more homes are being built for such buyers, many of whom are cash buyers and not affected by the restrictions announced in the Budget on mortgage interest relief. Many are also not residents of this country. This has meant that families are being squeezed, and being pushed further away from where they either grew up or want to live in order to buy a home. The Government hopes to raise almost £1bn by 2021 and will reinvest some of that money into communities where locals are being priced out of home ownership.

3. Housing Association tenants will be able to buy their homes.
From midnight of 25th November 2015, tenants from five housing associations can start the process of buying their own home through Right to Buy, a scheme that was extended in Osborne’s housing manifesto earlier this year.  This will allow 1.3million tenants who rent a council home the chance to become homeowners and buy their home from the local authority. The chosen housing associations (removed “will be”) piloting the scheme over the next few months are yet to be confirmed.

4. Accelerating housing supply.
Osborne announced further reforms to the planning system to deliver more homes more quickly. He will also be releasing public land suitable for 160,000 homes, re-designating unused commercial land for starter homes, extend loans to small builders and regenerate rundown estates.

Here is a breakdown of the new stamp duty rate for Buy to Let investors and second home owners, as of April 2016: 

Property value Current stamp duty New stamp duty from April 2016
£40,000-£125,0000 0% 3%
Up to £250,000 2% 5%
Up to £925,000 5% 8%
Up to £1.5m 10% 13%
Over 1.5m 12% 15%

For more information about how these new measures could affect you, contact your local Fenn Wright branch in Chelmsford, Witham, Stanway, Colchester, Manningtree, Ipswich and Kesgrave.