Budget 2014 – How will it affect the property market?
This week the chancellor has announced the budget. It can be very confusing to decipher the budget and what it actually means, however there are a number of changes that are likely to boost the UK property market. The government has announced that in 2015-16 the annual tax-free allowance will increase to £10,500, meaning that those in low-paid work will not have to pay income tax and those in the lower tax brackets will make a noticeable saving. It is predicted that people should feel richer and more likely to take the plunge into homeownership, especially while the government’s Help To Buy scheme is available to help people own their own home.
The chancellor has announced that the government will be giving support for the construction of 200,000 new homes. They are also proposing the construction of a “new garden city” in Ebbsfleet. The increased supply of properties should help meet the increasing demand, preventing house prices rising too much and prevent another housing bubble from forming. While it is a good thing that house prices have started to pick up, a dramatic upward turn in house prices could cause another economic crash, and I think it’s fair to say we’ve all had enough of the credit crunch!
The budget also announced the extension of one element of the Help To Buy scheme until 2020, which will allow buyers to get an equity loan of up to 20% towards the purchase of a new home in England for less than £600,000. This should help keep the property market moving. It will continue to help not only first-time buyers, but also those who are looking to move up the property ladder, but finding prices too high to do so without the extra help.
The news is not so good for the higher end of the property market, as the government has announced that the 15% stamp duty threshold for properties owned by a company will be lowered to £500,000 from £2 million, this will prevent owners of high-end properties avoiding stamp duty by using a company to purchase them.