Property appears in Budget twice: stamp duty relief and housing investment

In a move that is being touted as both a give-away and counter-productive, the Chancellor of the Exchequer announced in the Autumn Budget 2017 a relief from stamp duty land tax (SDLT) for first-time buyers.

The relief will apply from 22 November 2017 to purchases of residential property for £500,000 or less, provided the purchaser intends to occupy the property as their only or main residence. First-time buyers purchasing their first home for £300,000 or less will pay no SDLT.

Where the purchase price is over £300,000 but does not exceed £500,000 they will pay 5% on the amount above £300,000. The relief will apply to purchases in England, Wales and Northern Ireland. The necessary legislative changes will be included in the Finance Bill 2017 to 2018 but have been given provisional effect from 22 November 2017.

The Office for Budget Responsibility has been less than enthusiastic about the move. It said: “We expect this to increase house prices by 0.3 per cent, an estimate consistent with our published price elasticities for stamp duty changes. Most of this effect is expected to occur in 2018.” So, while first-time buyers may feel the benefit of no or lower stamp duty, they may feel the pinch of higher house prices, especially in the south-east where this duty give-away is expected to have the only real impact given the £300,000 threshold.

A further Autumn Budget housing announcement makes available over £15 billion of new financial support for house building over the next five years, bringing total support for housing to at least £44 billion over this period.

In terms of housing investment, there will be: £1.5 billion of loans to SMEs to build homes; £630 million in grants for remediation and infrastructure to accelerate the building of homes on small and stalled sites; £1 billion additional investment to increase borrowing for building new council homes; £2.7 billion in grants to local authorities for strategic infrastructure that unlocks new housing; £1.1 billion for assembling fragmented pieces of land into ready to go sites for developers to build homes on; £400 million to transform run-down estates and provide more housing; and £8 billion to support private sector house.

The Local Government Association (LGA) has responded, saying: “The LGA has long called for councils to be given greater freedom to borrow to build new homes and today’s Budget has taken a step towards that by lifting the housing borrowing cap for some councils. There are other measures in the Budget that will make a difference, especially more funding for Land Assembly, the Housing Infrastructure Fund and for SME builders. These are all measures councils have been making a case for.”

But the LGA warned: “If we are to truly get back to building 300,000 homes a year, then the Government needs to ensure all areas of the country can borrow to invest, so that they can resume their role as major builders of affordable homes.”

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