House building is up 23 per cent, according to chancellor George Osborne, “but that is not enough.”
He said the government will make further reforms to the planning system and offer half a billion pounds of finance to small house building firms. Mr Osborne confirmed that £150m of finance will be supplied to back the Right to Build scheme.
Regeneration of some of the urban housing estates that are in the worst condition will also be funded and the current Support for Mortgage Interest Scheme is being extended to 2016, Budget documents confirmed.
But perhaps the biggest change affecting this space that is relevant to advised clients was the pre-announcement that the Help to Buy equity loan scheme has extended for the rest of the decade, which Mr Osborne says will get 120,000 new homes built.
The government claims the scheme, which offers buyers with a deposit of as little as 5 per cent an equity loan of up to 20 per cent, supports almost one in three new-build homes in England and has helped 25,000 households to afford to buy or reserve a new-build home.
The £6bn injection is a major gamble for the government: when the scheme was initially launched at Budget 2013 £3.5bn had been set aside to cover the scheme for three years.
In the southeast, where Mr Osborne says the pressure is greatest, he confirmed new homes will be built in Barking Riverside, Brent Cross will be regenerated, and the first new Garden City in almost a hundred years, consisting of 15,000 homes, will be created at Ebbsfleet. A prospectus on the future of Garden Cities will also be produced by the government.
Taken all together, Mr Osborne says the housing policies will support more than 200,000 new homes for families.
In terms of taxation of property, most significantly the government decided to extend the 15 per cent stamp duty tax rate applied to ‘enveloped’ residential properties, that is to say those acquired by companies, to those worth more than £500,000 from 20 March 2014.
Previously the charge only applied to properties worth more than £2m.
The chancellor also announced there will be new bands for the annual tax on enveloped dwellings (ATED).
Certain enveloped properties worth more than £1m and up to £2m will be brought into the charge with effect from 1 April 2015 and properties worth more than £500,000 and up to £1m will be hit with the charge with effect from 1 April 2016.
It is understood that the ATED for properties worth between £1m and £2m will be £7,000 and for properties worth between £500,000 and £1m it will be £3,500.
The government will extend the related capital gains tax (CGT) charge on disposals of properties liable to ATED to properties worth more than £1m with effect from 6 April 2015 and to properties worth more than £500,000 with effect from 6 April 2016.
The chancellor also announced a long-awaited consultation on the taxation of future gains made by non-residents disposing of UK residential property from April 2015 will be published “shortly”.