Blow to buy-to-let and property investors

For a £150,000 house sale, the stamp duty will be £3,800, in comparison to £500 today.

A £200,000 house will now come with a £6,300 bill, compared with £1,500 today and a £300,000 house will have a £12,800 stamp duty charge compared with £5,000 today.

The government expects to pocket £880m a year from this measure by 2020 to 2021.

Stephen Smith, director of Legal & General Housing Partnerships, says an increase in stamp duty for those buying to let will undoubtedly dampen activity in this area of the market.

He says the change was particularly concerning given that it is to be introduced in conjunction with the reduced tax relief for landlords announced in the Summer Budget.

In the Summer Budget the government restricted the basic rate of tax the relief on buy-to-let financing costs available to individual landlords. The restriction to the basic rate of tax the relief on buy-to-let financing costs will be phased in over four years, starting from April 2017.

Lenders have stated the tax change earlier this year has forced them to reassess their affordability calculation for buy-to-let mortgages.

Lenders FTAdviser spoke to in the immediate aftermath of the Autumn Statement said they were once again considering the impact this move may have on their affordability criteria.

Steve Griffiths, head of sales and distribution at Kensington, says if the chancellor’s 3 per cent surcharge had been in place for the first three quarters of this year it would have added an average of £4,565 to every buy-to-let purchase.

However, experts FTAdviser spoke to after the Autumn Statement say there may be a reprieve for the burgeoning Build-to-Rent sector.

The government will consult on an exemption for institutionally backed investors.

Melanie Leech, chief executive of the British Property Federation, says the prospect of exemption for large institutional and corporate investors was recognition of the Build-to-Rent sector and its increasing contribution to housing supply.

In terms of how the collection of this tax will work Mark Davies, managing director and founder of Mark Davies & Associates, says with internationally mobile clients often buying property in multiple jurisdictions, one has to question how HMRC will monitor the number of properties owned by an individual.

He says: “Could this be an advantage for non-doms with offshore structures and offshore homes?

On the flipside of making it more expensive to be a property investor, the chancellor also announced plans for new and amendments to existing schemes to help people buy a home of their own.

With Help to Buy and Shared Ownership current restrictions on who can buy a home through shared ownership will be removed from April 2016.

Shared ownership allows people to buy a share of a home – rather than the whole house – and then buy a greater share over time as they can afford to.

They pay rent on the rest of the property.

Currently, these are allocated in several different ways including criteria set by local councils, for example whether potential buyers work in the local area or if they are already in council housing.

Help to Buy Shared Ownership will lift the limits so that anyone who has a household income of less than £80,000 outside London, and £90,000 inside London, can buy a home through shared ownership.

Only military personnel will be given be priority over other groups.

The scheme will apply across England.

People can buy a share between 25 per cent and 75 per cent of a home.

The rent on the rest of the property won’t be more than 3 per cent of the amount left.

For example, on a house worth £227,000 where the buyer has bought a 40 per cent share, the rent won’t be more than 3 per cent of the remaining 60 per cent - in this case £4,000 a year, or £340 a month.

The government also unveiled London Help to Buy, which will mean that if you live in London, the government will lend you 40 per cent towards the price of your home from 2016 if you live in our capital city.

Help to Buy Equity Loans are already open to both first-time buyers and home movers on new build homes in England with a purchase price up to £600,000.

Currently, if you are able to pay at least 5 per cent the value of your home as a deposit, the government will lend you up to 20 per cent of the rest of the value of the property, alongside your mortgage of up to 75 per cent.

The equity loan will be now available until 2021.

To reflect the current property market in London, from early 2016 the government will increase the upper limit for the equity loan it gives new buyers within Greater London from 20 per cent to 40 per cent.

The chancellor also announced that first-time buyers will be able to get a 20 per cent discount on 200,000 new starter homes.

Starter homes are new build homes available at 20 per cent off the market price.

They are only open to first-time buyers under the age of 40 and on homes where the discounted price is less than £250,000 outside London and £450,000 in London.

Alongside this discount, the chancellor confirmed £2.3bn will be spent on building 200,000 starter homes over the next five years in order to provide the 20 per cent discount on new homes.

Housing association tenants were also told they will be able to buy their homes, with the first sales in 2016.

Currently, most people who rent a council home have the right to buy their home from the local authority.

There are discounts on the home price available in many cases, depending on how long people have lived there.

Right to Buy will now be extended to housing association tenants during 2016, giving 1.3 million households the chance to become home owners.

A small number of housing associations will be piloting the scheme in the next few months.

Experts FTAdviser spoke to agreed that this was an Autumn Statement that would help first-time buyers but questioned whether the extension of government mortgage schemes could be just storing up problems for the future.

David Ingram, founder of online mortgage adviser directory MyLocalMortgage.co.uk, says: “The Help to Buy scheme is one that has always divided the opinion of the country.

“It cannot be denied that the scheme has helped more people get on the first rung of the property ladder; figures from the Office for National Statistics found that in the 27 months to 30 June 2015, 56,402 properties were bought through the Help to Buy scheme and 82 per cent of those were to first-time buyers.

“But opponents have always warned that it runs the risk of creating a housing bubble and a possible crash in the housing market.

“By announcing a new part of the scheme aimed at London, offering interest-free loans worth up to 40 per cent of the value of a new home, Osborne’s goal may be to help more people in the capital get on the ladder, but it will have to be closely monitored to ensure prices don’t spiral out of control.

“‘We are the Builders’ was a phrase bandied about by Osborne during the speech, and building certainly was at the forefront of his announcement.

“The housing budget will now be doubled to £2bn and Osborne pledged to build 400,000 affordable new homes before the end of the decade.

“This amounts to the biggest house building initiative since the 1970s and is certainly a strong response to the housing supply issue the country is currently facing.

“First-time buyers will most certainly benefit from the announcement, although many are warning that the focus should also be on helping those for whom homeownership is out of reach make that first step.

“Issues such as employment, affordable rent and saving schemes will also need to be addressed if the UK’s housing crisis is to be resolved in the future.”