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Stamp Duty reforms announced in the budget

Wednesday 22 November 2017

Chancellor Philip Hammond has announced a cut to stamp duty for first-time buyers as the leading housing measure in today’s Budget.

Housing took centre stage during today's Autumn Budget, as the Chancellor set out the Governments financial plans for the economy as a whole, in a speech that was riddled with topical quips.

Paying particular attention to getting young buyers on the housing ladder, Philip Hammond promised to build the homes that would make good on the Government's pledge to make home ownership a reality for all generations.

Stamp Duty relief for first time buyers

The Chancellor announced the abolition of Stamp Duty Land Tax (SDLT) for first time buyers, on residential properties up to £500,000, with zero tax to pay on the first £300,000. The remaining sum will be charged at five per cent SDLT, providing an effective reduction of around £5000 in fees.

The cut means that relief will be given to 95 per cent of all first-time buyers, with 80 per cent of all first time buyers paying no tax at all. Effective immediately, the relief will apply to transactions from or after 22 November 2017. Legislation will be introduced in the Finance Bill 2017 to 2018.

The relief will apply to purchases in England, Wales and Northern Ireland. In Wales, it will apply until Land Transactions Tax replaces SDLT for transactions in Wales from 1 April 2018. The support will not apply to Land and Building Transaction Tax in Scotland.

First time buyers can use the gov.uk calculator to work out their land tax liability.

Building the homes our country needs

Since 2010, the supply of homes has increased by 1.1 million, which includes 350,000 affordable homes. Housebuilding currently stands at it’s highest level since the crash, with 217,00 net additional homes added to stock just last year.

The Chancellor announced plans to build 300,000 net additional homes per year by the mid-2020's, a near 40 per cent rise on the number built last year, promising a £44 billion increase in spending to support the housing market.

New measures are to be introduced to encourage homes to be built, including support for Small and Medium-sized Enterprises (SME's) in order to reduce dependency on major housebuilders, £630 million will be made available to unstick the delivery of 40,000 new homes, £4 million will be set aside for estate regeneration and £34 million has been allocated for construction.

The Government will focus on building high quality, high density homes in city centres and close to transport hubs to make the best use of urban land. However after vowing to protect the Green Belt, questions are likely to be raised over where all of these new homes will be built.

Planning

In London alone, there are currently 270,000 unbuilt planning permissions. The Chancellor announced an urgent review to look at the gap between permission and builds in time for the Spring Statement next year.

Other housing measures

The Chancellor made it very clear that homelessness has no place in 21st century Britain. He pledged to invest £28 million into piloting a housing scheme and homelessness task force in order to eliminate rough sleeping by 2027.

During his speech, the Chancellor referenced the number of empty homes in the UK, and announced powers for local authorities to charge 100 per cent council tax premium on empty properties.

Philip Hammond confirmed the sum of £10 billion that the Prime Minister had previously promised to extend the Help to Buy Equity Loan scheme, to keep it going until 2021.

There are also plans to kickstart five new garden towns in areas of demand pressure.

Mark Hayward, NAEA Propertymark Chief Executive commented:

“The announcement today from the Government to abolish stamp duty for FTBs will have a positive impact on the market. It’s a smart move to ensure the dream of homeownership for young people can become a reality and will help buyers across the UK, including London and the South East where property prices are higher.

“We do however need to realise that this move will increase the demand for FTB properties and if we don’t have the supply it will push prices up. We have seen this in areas where Help to Buy is offered, as it attracts a great deal of interest from FTBs.

“In terms of the Government’s plans to build 300,000 new homes a year, it is yet another pledge to increase the number of new homes created. While we welcome this news, we have historically had these announcements from Government to accelerate housebuilding which has not been delivered. It is not a question of ‘how many’, it’s a question of ‘how’.”