Budget roundup

Thursday 19 March 2015

Chancellor George Osborne delivered his last budget before the general election yesterday, but what did it hold for the property industry?

Mr Osborne had promised that it would be a ‘no gimmicks’ budget, but did that turn out to be the case? And who were the winners and losers?

Savings was the key here. Following years of low-interest rate misery George Osborne finally offered savers some respite as he offered tax-saving concessions. Basic rate taxpayers won’t pay a penny tax on their savings until they hit £1000, reducing to a £500 threshold for higher-rate taxpayers. Addressing the Commons, the Chancellor said “…at a stroke we create tax free banking for almost the entire population. And build the economy on savings not debt.” A sigh of relief for many. 

Great news too for first-time house buyers. The government has pledged to top up your savings by £50 for every £200 saved (capped at £3000 per individual) as part of a new Help-to-Buy ISA. The new Help to Buy Isa will help people to save for a deposit for their first home and it is estimated that around 285,000 first-time buyers will use the scheme a year. 

Commenting on the Help to Buy: ISA announced in today’s Budget, Mark Hayward, managing director, National Association of Estate Agents (NAEA) said: “This initiative will provide a significant boost to the ability of a first time buyer to save speedily and effectively. This is exactly what is needed to engage the first time buyer market, particularly as we have seen the current criteria under the MMR constraining aspirations to buy a home. It especially benefits couples who are buying for the first time as both are eligible to open a Help to Buy: ISA which potentially means £6000 from the Government bonus towards a new home. It is also timely, considering house price inflation out paces wage inflation, so this additional boost to first time buyers savings pots will help them at least keep apace rather than fall behind the inflationary curve.”

Also of interest to Estate Agents, George Osborne promised a review of the business rates scheme, which will report back in early 2016, and could lead to high-street prices falling – potentially good news for estate agents!

Which side of the fence do you sit on? Let us know what you think to yesterday’s announcements via twitter using #PropertyProBudget2015

Maybe you think the sense of optimism could be misguided? Looking at the wider picture, could the budget announcements contribute to rising house prices yet again and become a catch 22 situation, especially bearing in mind the deficit in term of numbers of new homes being built?

Add to this heady mix, a potentially greater number of canny pensioners investing in the buy-to-let market come April when pension changes take effect and it’s difficult to predict the outcome.

Other highlights include:

  • The rate of the new transferable tax allowance for married couples, will rise to £1,100. 
  • Mr Osborne also confirmed reports that the personal allowance – the rate at which people pay 20p tax – would go up from £10,600 to £11,000 by 2017, benefiting 27 million people. This could also encourage more people to save, or maybe just keep up with the rising cost of living!

  • An above-inflation increase in the higher tax threshold. It will go up from £42,385 in 2015-16 to £43,300 by 2017-18, although the threshold will still be lower than the rate inherited by the Coalition.

  • Plans to increase fuel duty in September scrapped.

What do you think – is it a time to celebrate or commiserate – join in the conversation using #PropertyProBudget2015