The Chancellor saved his measures on the housing market until last today as he delivered his Budget to the House of Commons. But those pledges, most notably abolishing stamp duty for first-time buyers with immediate effect, have gained the most headlines and responses.
Philip Hammond focused on the lack of affordability and supply in the housing market, particularly for young people.
He told MPs: “There is one area where young people today will, rightly, feel concern about their future prospects – and that is in the housing market. House prices are increasingly out of reach for many. It takes too long to save for a deposit. And rents absorb too high a portion of monthly income.
“So the number of 25-34-year-olds owning their own home has dropped from 59 percent to just 38 percent over the last 13 years.
“Put simply, successive governments over decades, have failed to build enough homes to deliver the home-owning dream that this country has always been proud of.”
So what did Mr Hammond announce for the housing market? We take a look.
80% of 1st-time buyers won’t pay Stamp Duty
The announcement: Stamp duty abolished for first-time buyers on properties up to £300,000 with £300,000 of up to £500,000 exempt for first-time purchasers in London and the other most expensive places in England. The Chancellor said that takes about 80 percent of first-time buyers out of the tax’s reach.
What the Chancellor said: “I want to take action to help young people saving to own a home. With effect from today, for all first-time buyers up to £300,000, I am abolishing Stamp Duty altogether.
“To ensure that this relief also helps first time buyers in very high price areas like London, it will also be available on the first £300,000 of the purchase price of properties up to £500,000.”
The reaction: The Office for Budget Responsibility said a Stamp Duty cut would actually push up housing prices and benefit those who already own property. The OBR, which reports on the sustainability of public finances, 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.”
Updated SDLT tax bands for 1st-time buyers
|£0 – £300000||0%|
|£300000 – £925000||5%|
|£925000 – £1500000||8%|
Example of stamp duty for 1st-time buyers
|Before Budget||November 22 Onwards|
|£208,000 – average 1st-time buyer property in the UK||£1,660||£0|
|£410,000 – average 1st-time buyer property in London||£10,500||£5,500|
|Above £500,000||Stamp duty is unchanged on purchases above £500,000|
£44bn invested to build 300,000 homes a year
The announcement: An extra £44 billion of capital funding has been committed over the next five years to build 300,000 homes every year in England by the mid-2020s.
What he said: “We send a message to the next generation that getting on the housing ladder is not just a dream of your parents’ past… This is a complex challenge. There is no single magic bullet.”
The reaction: Jeremy Corbyn, the leader of the Opposition, said: “We need a large scale publicly funded house building programme, not this government’s accounting tricks and empty promises.” Polly Neate, chief executive of the housing charity Shelter, said: “The new 300,000 housing supply target is an important commitment, which we welcome.”
5 new garden towns to be created
The announcement: Five new garden towns and one million new homes on the Cambridge-Milton Keynes-Oxford corridor by 2050.
What he said: “We will use New Town Development Corporations to kick-start five new locally agreed Garden Towns in areas of demand pressure. Last week the National Infrastructure Commission published their report on the Cambridge-Milton Keynes-Oxford corridor. Today we back their vision and commit to building up to one million homes by 2050.”
The reaction: Oxfordshire County Council leader Ian Hudspeth said the announcement was ambitious but welcome.
Development focused on urban areas
The announcement: Protecting the greenbelt by focusing housing development in urban areas, particularly in city centres and around transport hubs.
What he said: “Solving the housing challenge takes more than money. It takes planning reform. We will focus on the urban areas where people want to live and where most jobs are created.”
The reaction: Sarah O’Grady, social affairs editor of the Daily Express, tweeted: “More homes to be built in urban areas where ‘the jobs are’. Makes sense.”
If you’re a first-time buyer, check out Homeward Legal’s comprehensive First-Time Buyers’ Hub where all your questions about purchasing for the very first time are covered in detail.