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How Could The Budget Affect You?

Published at: 23/03/2016

George Osborne delivered his 2016 Budget last week. But what was in it for property?

From a boost in flood defence spending and savings pots, to the final details of the controversial 3% Stamp Duty surcharge, here are six of the most important property-related takeaways from his budget.

First-time buyers saving for a deposit will be given a boost

The Chancellor announced a new Lifetime ISA to be available from April 2017 for savers aged under 40. Holders of the Help to Buy ISA, which launched last December, will be able to roll up any savings into this Lifetime ISA without losing their tax-free benefits.

Total savings into ISAs each tax year - whether used to buy your first home, move up the property ladder or other purposes - will rise from £15,240 to £20,000 from April 2017.

Also last week, to help lower earners, the Government launched its Help to Save scheme.

3% Stamp Duty surcharge going ahead from April

The Chancellor stuck to his guns on implementing a 3% Stamp Duty surcharge on the purchase of additional properties - to take effect from 1 April as planned.

Based on the £290,902 current average value of a UK home, the new 3% loading will see prospective landlords and second homeowners see their Stamp Duty bill soar from £4,545 to £13,272. The surcharge won't apply though to property priced under £40,000.

The Chancellor confirmed that larger residential property investors will now be liable for the 3% surcharge - in the Government's initial consultation investors 'bulk buying' 15 or more residential homes had been earmarked for exemption.

The 18-month window during which time those buying a new main residence but unable to sell their previous one, could claim a refund of the 3% surcharge, will be doubled to 36 months. The same grace period will apply if a main residence is sold but there is a delay on the purchase of a new one.

The Chancellor said he will use the additional tax raised to support community-led housing developments, such as a £20m project to help young families onto the housing ladder in the South West of England.

He also announced a major new package of support worth over £115 million to support those who are homeless and reduce rough sleeping.

Stamp Duty slashed on commercial property

Buyers of commercial property will benefit from a cut in Stamp Duty rates. This includes a zero band on purchase prices of up to £150,000; a 2% rate on the next £100,000; and a 5% top rate above £250,000.

The Chancellor described the move as, “a big tax cut for small firms".

More investment for homes in high flood-risk areas

Osborne pledged to provide a £700m boost to flood defences for the UK's homes and businesses. He will use funds raised from raising Insurance Premium Tax by half a percentage point - a move he believes will oonly add £1 to the average household insurance bill.

Flood defence schemes have been given the go-ahead in York, Leeds, Calder Valley, Carlisle and across Cumbria.

High speed rail links given green light

The Chancellor gave the go ahead for the High Speed 3 rail service between Leeds and Manchester. This will reduce journey times by 40% and will allow people to live easily in one northern city and work in another, a pivotal factor when it comes to where to buy a home.

Osborne is taking recommendations from the National Infrastructure Commission on northern connectivity and committing £300m towards High Speed 3 and road upgrades. This includes a new Trans-Pennine tunnel under the Peak District, running between Sheffield and Manchester.

He also commissioned Crossrail 2, which will connect south west and north east London, while reducing congestion on the Tube network and pressure on Victoria and Waterloo stations. The government will be putting £80m towards the project.

The first Crossrail - or the Elizabeth Line as it's now known - has already had a dramatic impact on the property prices along the route and Crossrail 2 could have a similar effect.

Capital Gains Tax reductions

The Chancellor slashed the rate of Capital Gains Tax from 28% to 20% for higher-rate taxpayers, and 18% to 10% for basic-rate taxpayers. But buy-to-let investors won't benefit, as the reduced rate will not apply to residential property.

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