Dean Velani, the NLA’s Parliamentary Officer, takes a look at the 2013 Budget and what it means for the UK’s housing market.
Today the Chancellor of the Exchequer, George Osborne MP, delivered his annual Budget Statement.
There were no shock announcements for the landlord community. Unfortunately the speech didn’t grant the reform of Capital Gains Tax (CGT), Stamp Duty Land Tax or Energy Saving Allowance that we were hoping for but there was good news for home buyers as George Osborne took the Budget as an opportunity to unveil the Help to Buy Scheme.
The scheme will be available to all buyers of new build properties, including first time buyers and those looking for support to step up the property ladder.
It offers two levels of support. The first offers an equity loan for those who can afford a mortgage and who can provide five per cent of the deposit. The government will then offer the remaining 20 per cent contribution to the deposit. This loan will be interest free for 5 years and can be repaid when the property is sold and the only constraint is that the property cannot be worth more than £600,000.
The second level of support is the Mortgage Guarantee in which buyers will have access to high loan to value mortgages to help more tenants to buy their own homes.
Help to Buy will launch in April 2014 and will be available for an initial period of three years
The NLA welcomes the new scheme and hopes that it will encourage a fair and balanced housing market. Increasing the supply of new housing is imperative to getting the country’s finances moving. Encouraging a diverse housing stock is central to this and we hope that the Government’s Help-to-Buy scheme will stimulate the owner occupied market.
However, more targeted measures are needed to address the chronic shortage of housing across all tenures. Had the Government decided to offer Capital Gains Tax Rollover Relief for landlords, they would have enabled capital gains reinvestment that could have provided more housing for rent in an increasingly pressured market.
On a poisitve note for the rental market, we welcome the significant increase in funding for Build to Rent. This is an acknowledgement of the evolving and increasingly important role of the private-rented sector in the UK’s housing market and we look forward to this initiative providing more good quality affordable accommodation for rent.
We hope that increased supply and the Help to Buy scheme can together support the Government in its journey towards an ‘aspiration nation’.