After years of Brexit-based uncertainty in the property sector, 2020 looks set to be a strong year, with some predicting a ‘Boris bounce’ as pent-up demand rejuvenates the market.
Our first real clue as to how the Conservative majority government plan to boost the housing sector will come in March when Rishi Sunak reveals what’s in his red budget box. Whilst we can’t know for sure what will be announced, the experts at Attwells Solicitors can make some educated predictions based on various leaks, hints, and information we’ve picked up on in previous months.
Why is this budget so important for the housing market? It’s the UK’s first budget as a non-EU state and Boris’ first as the leader of a majority government. This will be his chance to set out his priorities. One thing he’s been clear about is his desire to free up and support homeowners, therefore we are confidently expecting positive changes to how the housing market is supported from Westminster.
Will the mansion tax be announced? It has long been rumoured that Boris and Sajid were lining up the so-called ‘mansion tax’ for homeowners with bigger properties. However, what is considered a mansion for tax purposes and how this would actually be collected, isn’t yet clear. This is due to the differing house price variables across the UK. For example, in St. John’s Wood, where our London office is based the average property price is £3,300,000 (Zoopla 2020), this would buy you a modest home such as a one to a two-bedroom apartment. However, for the same money in Colchester, where the Essex office is based you could purchase a six to seven-bedroom property with all the amenities associated with a property of that stature. Therefore, it’s not surprising many Conservative MPs are opposing this policy and that suggestions in the press speculate the policy has been ‘shelved’ (Daily Mail 2020).
Our past article ‘What could the Mansion Tax mean for you?’ covers this possibly in greater depth.
Getting onto the Property Ladder in Ipswich, Colchester & London
Getting on the housing ladder will get easier. First time buyers have reason to be hopeful, if the Queen’s Speech is anything to go by, where it was announced the government were planning to take steps to support first-time buyers and encourage home ownership in general. Conservative sources have also suggested plans were being considered to provide 30% or higher discounts to locally based first-time buyers. Of course, solid details have yet to emerge, and the March budget will likely clarify whether this discount will be for private sector, council or housing association properties. It also remains to be seen what the definition of a ‘local’ buyer is. However, we are expecting positive news for first time buyers.
Our past article ‘Government Plans to Improve Housing’ covers this announcement in greater detail.
Easing stamp duty. The government understand that a healthy housing market is a strong driver of economic growth, so it’s possible the budget might have something to say about cutting stamp duty rates, possibly at the lower end of the market. An initial idea to raise the stamp duty threshold to £500,000 was dropped from the Conservative manifesto… could this be revived for the 2020 budget? It’s not out of the question.
Feeding the demand for new houses. As the demand for homes increases, we could see further measures announced in the 2020 budget that allows more land to be released for the purposes of building properties. New funds could also be allocated to local authorities and housing associations which enable building schemes.
Relaxing affordability tests. Since the 2008 financial crisis, affordability tests have prevented many from even considering getting onto the property ladder. There are rumours that plans to allow mortgage lenders to relax these rules are in the pipeline, alongside new guidelines that will give people access to longer-term loans, which will lower monthly repayments, and open up the prospect of a place on the housing market to more people.
Whatever announcements are made during the budget next month, Attwells will be there to help you buy or sell your property. Our trusted and transparent conveyancing solicitors are based in Ipswich, Colchester & North London, and have expert knowledge and experience that will ensure you enjoy a smooth transaction. Get your instant online conveyancing quote today.
Attwells Solicitors are award winning jargon-free conveyancing experts. We are committed to demystifying the law. To that end here is more information on the support available for first time buyers and an outline of SDLT.
Stamp Duty Land Tax which is also referred to as SDLT, is not payable for first time buyers if you, or both purchasers are buying their first home. The property must also be your main residential property and cost less than £300,000.
Available Support for First Time Buyers (2019)
- New Builds & Help to Buy Loans. If you’re looking at applying for an equity loan to purchase a new build, our conveyancing team can guide you through the implications this has on what types of mortgages you can and can’t access, as well as other pros and cons of this scheme.
- Help to Buy ISAs. If you set up an ISA before the November 2019 deadline, you still have until 2029 to use it. Even if you missed this opportunity, it might still be possible to get similar returns with a Lifetime ISA, though you should always consult our legal experts to help you understand how the bonus is applied, and how that might affect you deposit.
- Shared Ownership Schemes. Buying a stake in a property, and paying rent on the part you don’t own, can be a great way for first time buyers to get on the housing ladder. However, it’s important to remember that buying into a shared ownership property is less straightforward than buying outright. Our conveyancers can advise you on potential legal complications that can arise from shared ownership, particularly if you plan to buy the remaining share of your property at some point down the line.
- First Time Buyer Stamp Duty Relief. If you are buying your first property, and it is valued at £300k or less, you won’t have to pay stamp duty. However, for more complex situations, such as if you’re involved in a joint purchase where you are a first time buyer, but your partner has previously been a homeowner, we can advise you on your legal options.