Stamp duty to be abolished for some
As expected Philip Hammond has confirmed that stamp duty will be abolished for those buying via a shared ownership schemes, for homes worth less than £500,000. This change is effective from 29th Oct and will be backdated to November 2017. This policy change is expected the cost the government only £5 million, so the impact will be minimal.
More cash for the housing fund
The Chancellor also announced that a further £500m will be made available for the government’s Housing Infrastructure Fund. The Housing Infrastructure Fund provides capital grants that allow local authorities to fund new infrastructure that will unlock new homes in areas of greatest demand.
Help to Buy Equity Loan scheme
Among the other measures revealed included a new Help to Buy Equity Loan scheme. This will run from 2021 to 2023 and is limited to first time buyers.
Stamp duty for non-residents
There will also be a consultation on a 1% extra Stamp Duty change for non-residents buying UK properties. This is a climb down from the governments original proposal to levy a 3% surcharge.
Capital gains tax Lettings Relief reduced
Landlords will see Capital gains tax Lettings Relief reduced. This will affect buy to let landlords when they sell their properties.
Business rates cut by one-third
In a move to prevent further degradation of our high streets, business rates will be cut by one-third for shops with a rateable value under £51,000. This could help 500,000 small high street businesses. Also, a £650 million fund will be setup to help fund the renovation and transformation of high streets in areas of particular need.
IR35 tax clampdown
The Chancellor also revealed an intention to clamp down on self-employed people working for companies as consultants, despite in effect being employees. The IR35 tax framework aims to stop tax dodging by disguising employment by individuals trading as limited companies. In the future making private firms with more than 250 employees will be made responsible for checking contractors’ status. Failure to detect IR35 contraventions will result in the employer being fined.
The construction industry employs the services of individuals trading as limited companies extensively. The impact of this will be that hundreds of thousands of private-sector contractors will face higher tax and National Insurance bills from April 2020. This will increase new build production costs and narrow profit margins.
Depending on how we fare in Brexit negotiations the current budget may be substantially revised to take account of the new economic environment.
Shaun Peart, Managing Director of LSL Land & New Homes, commented that:
“The Chancellor has given a clear message that Housing continues to be on the agenda through additional funding opportunities and by reiterating the need to accelerate housing numbers in the future give confidence to, both, large and small developers.
The Chancellors’ announcement that Help to Buy (HTB) will continue after March 2021 until March 2023 demonstrates, further, the Government’s appetite to increase housing delivery and should give Developers reassurance for the longer-term view on, both, their land acquisition and unit numbers. This is in stark contrast to the dramatic effect the loss of HTB could have been. Having said that, as only First Time Buyers (FTB’s) can take up HTB and Regional price thresholds from March 2021, it is important that existing home owners who wish to take advantage of the HTB scheme, for a future move, do so now and that developers, in turn, consider the housing mix of future developments.”