From stamp duty to commercial property tax, we’ve summarised the key takeaways from the 2017 Budget.

 

Stamp duty

Estate agents across England, Northern Ireland and Wales, could be facing a winter windfall thanks to the abolishment of stamp duty for single or joint first time buyers on properties priced up to £300,000, introduced with immediate effect.

The Budget also aims to assist those purchasing homes in the higher bracket (up to £500,000), by offering stamp duty relief on the first £300,000.

It is expected that the new legislation will encourage over 3,500 new first time buyers into the market.

And as the perk will apply to first timers already in the buying process (even post exchange), a further 160,000 existing buyers can now expect to make savings.

It could even mean that these unexpected savings prompt buyers to upgrade to more valuable homes, since they already have the deposit to hand. This is something that could boost sales volumes for agents across London and the South East especially.

However, on an average property value of £208,000, the stamp duty saving stands at just £1,660 which, alone, might not be enough to encourage deposit savers into the market.

The Budget aimed to assist first time buyers of lower cost homes through the Help to Buy Scheme, which helps people to purchase a home with a 5% deposit. The Government hopes to double the number of people the scheme helps to get on the property ladder from 135,000 to 270,000 by investing an additional £10bn into the scheme.

It could even mean that these unexpected savings prompt buyers to upgrade to more valuable homes, since they already have the deposit to hand. This is something that could boost sales volumes for agents across London and the South East especially.

However, on an average property value of £208,000, the stamp duty saving stands at just £1,660 which, alone, might not be enough to encourage deposit savers into the market.

The Budget aimed to assist first time buyers of lower cost homes through the Help to Buy Scheme, which helps people to purchase a home with a 5% deposit. The Government hopes to double the number of people the scheme helps to get on the property ladder from 135,000 to 270,000 by investing an additional £10bn into the scheme.

For buy-to-let investors, there was no u-turn on the 3% stamp duty surcharge which was introduced in April last year on the purchase of additional homes.

Housing stock

With housing stock shortages reported nationwide, and no single solution to the problem, the fact remains that more homes need to be built.

Chancellor Philip Hammond’s announcement of £44bn to support new housing was therefore welcome. It will rejuvenate efforts to deliver 300,000 new homes a year by mid 2020s. The figure includes £1.2bn to buy land for new homes and £2.7bn for infrastructure.

Hammond also announced changes to the planning system which will encourage better use of land in cities and towns, meaning more homes can be built while protecting the green belt. Plans to create five new ‘garden’ towns was also unveiled.

Commercial property: removal of CGT relief to foreign investors

A somewhat surprise measure in the Budget was the expressed intention to remove capital gains tax relief on foreign property investors in the UK market by April 2019.

Agencies dealing with international buyers could see a decline in sales as the UK would now essentially be removing incentives for multinational investment groups and trust to purchase and hold property in the UK.

While this may help the housing shortage issue, the flipside could see a decline in sales of high value property. HM Revenue & Customs has announced a consultation period to allow investors to comment on the proposal.

Commercial property: business rates

A planned cut to business rates was brought forward by two years in the Budget.

Business rates which are currently pegged to the Retail Prices Index (RPI), will be pegged to the more favourable Consumer Prices Index (CPI) from April 2018, rather than the planned 2020 timeline.

Further revaluation of rates will occur on three yearly intervals as opposed to five yearly intervals in an effort to reduce the scale of any subsequent increases in business rates.

Agents can expect to see a smaller rates bill for themselves and their commercial property clients.

Commercial property: staircase tax

There was an end to the so-called ‘Staircase Tax’ in the Budget which introduced a change in the law earlier this year that meant small businesses using multiple spaces in a shared building were billed for rates as if they were separate premises.

The higher charges were also backdated. It is recognised that this change will bring widescale relief to small businesses who had no time to prepare for a larger, retrospective levy.

Hammond said the change in the law would also be backdated, to compensate firms for the extra charges. Agents who have businesses in multi-tenancy buildings can expect a possible refund, or at least a smaller rates bill. For lettings agents, this change could stimulate multi-unit commercial tenancies once again.

Empty homes

The Chancellor also announced a crackdown on empty properties.

He said he will give local authorities the power to double the council tax premium on empty homes from 50% to 100%. This will be part of new legislation so won’t be effective immediately.

But if and when it does come into force, it will be welcome news for lettings agents who could have new landlord clients and new tenancy management contracts.