Stamp duty
Many had hoped that the government would review both the thresholds and the current slab mechanism of the Stamp Duty Land Tax (SDLT) system but were left disappointed.
However, more foreign millionaires buying properties in the UK will now be caught in the stamp duty net. Chancellor George Osborne has now clamped down on the practice of getting around the tax by making their purchases through companies.
The Chancellor had already imposed the duty on all properties bought through a “corporate envelope” above £2 million. But from midnight last night it fell to just £500,000.
That will mean that practically every London property purchased from overseas through a company for investment purposes will fall into the 15 per cent tax bracket.
“Many of these are empty properties held in corporate envelopes to avoid stamp duty. This abuse will end,” George Osborne said.
However, the expansion does not apply to homes that are rented out.
House Building
The housing measures will help to boost consumer confidence and the money being put into new housing. The Chancellor claims this will support over 200,000 new homes and will go some small way to helping to ease imbalance between the supply and demand.
It was announced that house building is up 23 per cent and the Government has pledged £0.5 billion worth of finance for small house builders to create more new homes.
However, while plans for regeneration and new homes in Barking, Brent Cross and the new garden ‘city' at Ebbsfleet, Kent are welcomed, many feel that these measures are just a drop in the ocean and are insufficient to tackle the dire housing shortage.
Help To Buy
The biggest housing change, which was leaked on Sunday, is that the equity loan scheme, designed to get the property market moving, is being extended to 2020. By doing so, it will allocate an extra £6 billion in funds.
It has been confirmed that the first-phase of Help To Buy, which gives buyers an interest-free loan of up to 20 per cent of a deposit to buy a new-build home, has been extended until the end of the decade.
The government will consult on opening up the Help to Buy equity loan scheme for those who want to build their own home.
However, the Budget has left some vital questions about Help to Buy unanswered, as there was no clarity over the future for high LTV mortgage lending after 31 December 2016.
Right to Build
The government has also thrown extra weight behind the custom build industry with the announcement of a £150 million custom build initiative.
The Treasury confirmed it would consult on a new Right to Build scheme, giving custom builders a right to a plot from councils.
The Budget states: “For people who want to build their own home, the Government will consult on creating a new ‘Right to Build’, giving custom builders a right to a plot from councils, and a £150 million repayable fund to help provide up to 10,000 serviced plots for custom build.
“The Government will also look to make the Help to Buy: equity loan scheme available for custom build.”
Support for Mortgage Interest (SMI)
The SMI scheme, which provides support for 200,000 homeowners receiving certain income-related benefits a year, according to the Treasury, has been extended to 2016.
The scheme pays the interest payments on home loans or loans taken out for improvements on a property. These are usually paid direct to the lender.
The Budget stated: “During the recession, the SMI scheme was temporarily set at a higher capital limit of £200,000 with a shorter waiting period of 13 weeks. The scheme has helped over 200,000 people a year remain in their homes.
“To continue support for homeowners facing difficulties during the recovery, the SMI scheme will remain at its current, higher level until 31 March 2016.”
Borrowers that have been unemployed for 13 weeks are eligible for SMI. Considered loan sizes have now doubled to £200,000.
Business
The Government announced that banks must agree a ‘deed of priority’ within seven days. Not only will this simplify the process but it will also ensure that SMEs will benefit from smoother and faster access to finance.
The Chancellor also announced that he will launch a consultation on legislating to help match SMEs who are turned down for a loan with alternative lenders.
Banks could therefore be legally obliged to direct rejected loan applicants to alternative lenders. Mandatory referrals is without doubt the biggest possible benefit to the industry and to specialist lenders.
It was announced that direct lending from Government to UK businesses to promote exports doubled to £3 billion and interest rates on that lending cut by a third.
Business rate discounts and enhanced capital allowances in enterprise zones have been extended for three years.
Cutting interest rates on exports and doubling the funding for export finance will be a welcomed move for manufacturers.
Planning
Planning rules may be relaxed to allow more commercial buidings to be turned into homes, in an effort to tackle the housing shortage.
New rules were already introduced last year allowing offices to be converted into homes without going through a lengthy planning application process. It is estimated that applications for conversions to residential use have risen 500 per cent since last May.
The Government is to consult on extending these rules to include warehouses and light industrial buildings as well.
The Government also announced that it will look at how to simplify the planning system by reviewing the so-called General Permitted Development Order. It is considering introducing a system comprising of three different levels of planning permission for schemes depending on their size.
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