Property and the housing market were noticeable by their absence in this year’s Spring Budget, quashing hopes of any reduction in stamp duty costs or other help for homebuyers.
Prior to the Budget, some expected that the Chancellor may expand on plans announced in the recent housing white paper to build more affordable housing, or suggest potential amendments to stamp duty, which is a major obstacle to those wanting to get onto or move up the property ladder.
Neither of these happened, but given that stamp duty is such a big money-spinner for the Treasury, this was not a major surprise. According to government forecasts, stamp duty receipts are expected to climb from £11.6 billion in the current 2016/17 financial year to £17 billion in the 2021/22 financial year. The Chancellor did announce that the reduction in the stamp duty filing and payment window will be delayed until 2018–19, but this will have little impact on homebuyers.
There were, however, some measures announced in the budget which could have potentially made it harder for the self-employed to qualify for the mortgage they want.
The Chancellor said that Class 4 National Insurance Contributions (NICs), paid by the self-employed, would increase from 9% to 10% from April 2018, rising to 11% in April the following year. This would have reduced net income for higher-earning self-employed people, which could in turn have impacted on the amount they can borrow to buy a property. Fortunately, just a week after the Budget, the Chancellor performed a u-turn on the NICs rise, announcing that he would abandon the increase.
Another significant change announced in the Budget was the reduction of the tax-free dividend allowance, which will be reduced from £5,000 to £2,000 from April next year. This will affect landlords who hold their property in a limited company and pay themselves in dividends, as when the change comes into effect, any dividend income above the new lower threshold will now be subject to tax.
Finally, there was confirmation that the Lifetime ISA, designed to help people aged under 40 to save for a home or for their retirement, will launch next month. You can save up to £4,000 a year into a Lisa, and the government will boost your contributions by another 25%. Funds held in a LISA can be used after 12 months to buy a first home valued up to £450,000.
Spring Budget 2017