What does the Budget mean for property?

 The Chancellor may have ‘sat on his hands’ when it came to property in his 2017 Spring Budget. But that doesn’t mean you have to. 

It’s safe to say that Chancellor, Philip Hammond’s Spring Budget is unlikely to go down in the history books. But with so much going on already in the UK housing market, it’s a great opportunity to take stock.

Here are some key pointers...whatever your relationship with property.

“I’m saving for my first home…”

Desperately looking for somewhere to stash your cash? The Chancellor presented an additional option in his Budget speech by confirming the launch of new NS&I Bond.

Available from April this year, the account will pay a fixed rate of 2.2% on deposits of up to £3,000. The maximum total interest available on the account is £202 before any tax is accounted for.

Thankfully, deposit savers have alternatives.  

  • The Lifetime ISA, which can be used for first home OR retirement savings, is set to launch as planned on 6 April. For every £1 you save into the account, the Government will contribute another 25p and it’s all tax-free. The annual contribution limit is £4,000 which puts the maximum Government bonus available at £1,000 a year. Get the lowdown on the accounts with our Q&A.

  • The Help to Buy ISA, which launched in December 2015, allows you to save up to £200 a month into the account (in addition to an opening £1,000) and earn interest tax-free. The Government will then top up your pot with a tax-free 25% bonus (maximum £3,000) when you complete on the purchase of your first home. Find out about the account's pros and cons.

  • Help to Save, which is still set to launch in April 2018 will give lower-income savers who can stash away £50 a month, a tax-free bonus of up to £1,200. Initially announced in the 2016 Budget this was our round-up of the account at the time.

  • Cash and stocks and shares ISAs, will improve from this April as annual tax-free allowances rise to £20,000 from a current £15,240.

Don’t forget! The Personal Savings Allowance means you can earn up to £1,000 interest a year tax-free if you are a basic-rate taxpayer, and £500 if you are a higher-rate taxpayer.

“I’m planning on moving home…”

Hoping for a reprieve on stamp duty before your next house move? Unfortunately, the Chancellor ignored industry calls to overhaul the property tax.

These included demands for the tax to be paid by sellers rather than buyers, an exemption for retired people downsizing, and a reduction in the 10% and 12% top-tier stamp duty rates.

“I’m a homeowner with spare rooms…”

No mention was made of it in the Budget, but supporting documents reveal the Government plans to consult on redesigning the Rent a Room scheme which enables people to earn up to £7,500 a year tax-free through renting out a room in their home. Find out more about the Rent a Room scheme with our Q&A.

“I’m a renter…”

If you were holding out for the ban on lettings agent fees Hammond promised in his Autumn Statement last year, the Budget failed to clarify a date at which it would take effect. In fact it wasn't mentioned at all by the Chancellor. However, the consultation will reportedly take place this month or next, bringing the ban one step closer to reality.

In the meantime, here's a round-up of the kind of rental fees a lettings agent might charge.

“I’m a buy-to-let investor…”

The good news? The Budget held no further bad news for buy-to-let investors who have already felt the screws turning on profits.

As planned, mortgage interest tax relief will be gradually cut back to the basic rate of 20% between April 2017 and April 2020. Higher rate (40%) and additional rate (45%) taxpayers will stand to lose the most.

Wear and tear relief has already been capped at a rate of 10%.

However, the amount you can earn in rental profits before tax is payable will soon nudge upwards as the personal tax-free allowance – currently £11,000 – will rise to £11,500 from 6 April. And the Chancellor confirmed it would stand at £12,500 by 2020.

Find out how to make the most of the last few weeks of the tax year.

There was no change of heart on the 3% stamp duty loading already payable on the purchase of additional homes either. The premium has caused confusion as well controversy, as demonstrated by the 600-plus questions we have received on our 3% stamp duty Q&A.

“I occupy a commercial property…”

The real property focus in the Budget was on the non-residential sector.

Business rates will undergo a revaluation on 1 April, 2017 for the first time in seven years, which could see many businesses paying more.

But if your business will be one of the hardest hit by rises, the Chancellor unveiled three measures designed to cushion the impact.

  • If you lose small business rate relief as a result of the revaluation, any increase in your bill next year will be capped at £50 a month. Subsequent increases will either be in line with the transitional relief cap or £50 a month, whichever is higher.

  • There's also a £1,000 discount on business rates bills (in the next financial year only) for all pubs with a rateable value of less than £100,000. That’s 90% of the country’s pubs (or around 25,000).

  • Hammond ring-fenced £300m until 2022 for councils to offer business rates relief to hard-hit cases in local areas.

Businesses hoping for a wider overhaul of the business rates system, will be disappointed. The Chancellor, pledged to consult on reform of the revaluation process - before the next revaluation is due in five years.  

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