What will the Budget mean for the property market?

What will the Budget mean for the property market?
The Chancellor Philip Hammond will unveil his Autumn Budget on October 29th, with many speculating that he could announce a range of measures affecting the property market.

Here, we look at some of the options the Chancellor is rumoured to be considering.

Possible extension of Help to Buy

Recent weeks have seen growing pressure on the government to confirm the fate of the Help to Buy scheme, which is due to end in 2021.

The scheme enables those with only a small deposit to buy a new build home worth up to £600,000, with the help of a 20% equity loan from the government. The loan, which is interest-free for the first five years, must be repaid either when the property is sold or when the mortgage is paid off.

Lenders want the Chancellor to clarify what the future holds for Help to Buy in the Budget, and to confirm whether the scheme will be extended or amended

Potential stamp duty surcharge for foreign buyers and buy-to-let landlords

The government has already announced its intention to consult on introducing an additional 1% to 3% stamp duty on overseas buyers of residential property, so this may be confirmed in the Budget.

The proceeds of the hike would be used to help cut the number of rough sleepers in the UK. The new charge would be levied on top of the existing 3% surcharge that’s already imposed on purchases of second homes and buy-to-let properties.

Review of planning permissions conclusions due

A review of planning permissions was announced in last year’s Autumn Budget, looking into the gap between the number of permissions given and the number of properties being built. The conclusions are due to be announced on October 29th. Many commentators are calling for the state to retain more of any increase in value that landowners gain from planning permission granted by local authorities.

Confirmation of the scrapping of borrowing cap for local councils

The Prime Minister announced at the Conservative Party Conference that she would lift a borrowing cap for local councils wanting to build new homes. The Chancellor is expected to confirm this in Monday’s Budget. In an open letter following Theresa May’s announcement, sixty councils across England have promised that they will build council homes on a scale not seen since the 1970s.

Possible tax breaks for landlords selling to tenants

Earlier this month Conservative think-tank the Centre for Policy Studies suggested that the government should introduce a new ‘Help to Own’ scheme, to encourage landlords to sell and private renters to buy.

Under the proposed scheme, for one year, the Capital Gains Tax (CGT) payable by a landlord on a sale could be turned into a rebate which would be shared between landlord and tenant, provided the property is sold to a tenant that has lived in the property for three years or more.

Clampdown on ‘rent-a-room’ relief

Earlier this month, The Sunday Times reported that the Chancellor could be considering a clampdown on ‘rent-a-room’ relief in the Budget, to stop homeowners claiming the relief on properties which are not their main home.

The relief allows homeowners to earn up to £7,500 a year tax free from letting spare rooms in their homes. The Chancellor may introduce a new ‘shared occupancy’ test for homeowners to prove they are living in the property where a room is being let.

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