Well, having had a good look now at the numbers and comments on the budget, here's my assessment of how they will help/hinder your housing project this year and next.
Bit more money in your back pocket
At the moment most of us (few age anomalies) can earn £9,440 tax free. From April this year (2014) this will jump to £10,000 and from April 2015 to £10,500. If you are a 20% tax payer, that's an extra £100+ in your back pocket this year and next. Or if you are renting it will probably help towards any increased rental costs.
KATE's VERDICT: More money is always good, but it won't make a huge difference to property projects. £100 might help you to do up a room, and the extra money next year might even cover a
new bed or carpets!
Help for everyone saving for a deposit or to extend your home
One of the good things that came out of the budget is everyone can save up to £15,000 cash in an ISA - tax free. This will help substantially anyone who is working hard to build a deposit or secure money for changes to their home.
The average house price is around £170,000 now, so a 10% deposit will be £17,000, not far off the savings limit. £15,000 would also go someway towards building a conservatory or a small extension (or porch may be in London!)
KATE's VERDICT: Good news for anyone saving for a property project
Housebuilding
Lots more 'in theory' extra support for housebuilding. Especially good news is the £500 million for smaller house builders and the £150 million for self builders. Time to get yourself down to the
Self Build and Renovation Centre in Swindon!
Help to Buy extension to 2020 will help give people time to save for a new build property, reassured that the scheme 'won't run out' as it keeps going for another six years. Also worth noting that despite the press commentary it will also take away the idea of help to buy causing a bubble. Excellent research from Savills proves where Help to Buy has been taken up, it's in lower priced areas which aren't experiencing house price rises - in fact quite the opposite!
Help to Buy an existing home is still due to end in 2016.
And the idea of the new Garden City in Ebbsfleet appears to be a 'starter for ten' for the government to establish a 'template' of how Garden Cities should work. Adding 15,000 homes is great for local employment and will seriously help put money back into the economy.
KATES VERDICT ON HOUSEBUILDING
H2B2 is it needed?
However, the Help to Buy Scheme for new builds was in place to help buyers while the banks were refinancing and couldn't lend at 95% levels as well as the need to increase housebuilding quickly. But I have no idea why it's set at £600,000, it's a ridiculously high amount for tax payers to support and the reasons for introducing it in the first place look like they may have gone, so not sure the extension is actually required.
For more information on Help to Buy an existing home and Help to Buy new build read our checklists:
Help to Buy an existing home checklist
Help to Buy new build checklist
Ebbsfleet: Where is the community involvement?
Although Ebbsfleet is good news, we do need to be careful this isn't riding rough shod over the new local community planning rules and regulations where people are allowed to oppose development. People local to me are finding they aren't being listened to and their proposals are being brushed aside, so not quite what the government had promised.
Small build and self build help
This is vital. Although 25% of detached properties are self build, we need many more smaller properties to be built. Self build isn't about 'Grand Designs' it's about people building a home they couldn't otherwise afford as the BBC's build your own home for £100k showed. So this support and the support for small builders is brilliant.
If you want to build your own home - really now is the time to do it!
For more advice visit our checklists:
Choosing a timber frame checklist
Selfbuild checklist
Stamp Duty
In the past anyone buying a £2mn + property through a company would pay 15% in tax, but now this threshold has been lowered to just £500,000. Clearly the government is after anyone investing just to make money and penalising them heavily for it - not a bad thing when we are short of stock!
KATES VERDICT ON STAMP DUTY
Good news to clamp down on empty properties for investment only from the rich, BUT it's a shame the government hasn't used this extra money to fund:-
1. Increased stamp duty limits to £300,000 for 3% tax
2. Put more money into shared ownership, especially in expensive areas tight on stock ie London
3. Dropped stamp duty altogether for first time buyers
Pensions
You can, within the next week, take your pension pot up to £30,000 instead of the £18,000 cap before and, you don't have to put it in an annuity. From April 2015 you also are unlikely to be taxed at the current rate of 55%, but a lower rate on the money you decide to take out of a pension.
On the one hand this is amazing, real freedom to spend your retirment money as you wish. So for me I'm delighted, but that's because I have good financial advice from experts I trust.
KATES VERDICT
I am very nervous about this as it will mean more pensioners investing more money in property and that scares me rigid. Currently there is NO regulation and LITTLE if any training on 'how to invest in property' bar from rogue property investment companies who, at the moment will be rubbing their hands with glee at the thought of taking these lump sums from people - which many pensioners will never see again!
The government MUST ACT NOW to protect people investing in property as an urgent priority. Financial advisors MUST be trained to give advice on property investment as part of the £20 million investment in free advice.
It's also good news that yet again buy to let investors are being 'left alone' despite many calls for taxes to be raised. At the moment they offer a vital service for tenants, many of them a very good one. Soon those letting to benefit tenants will be hit hard by the potential nightmares of Universal Credit, so I guess this, coupled with things like the clamp down by HMRC is why they haven't increased the tax yet.
First time buyers are still not getting the stamp duty break they should, and deserve. For first time buyers getting on the market in London, many will have to pay £250-300k and so will have to pay over 3% ie a minimum of £7,500 in stamp duty tax, that is really, really unfair.
It's also a shame for anyone buying at £250k, that the rate hasn't been lowered to 2% and/or the limit increased to £300,000. For those selling between £251,000 and £275,000 it will continue (bar London) to be a tough market.
Need more commentary? Contact me on 07585 897128 or Contact Us
