Phillip Hammond delivered his Autumn Budget to the House of Commons today. Here’s a breakdown of what it means for the UK property market.
From today, stamp duty for all first-time buyers of homes worth up to £300,000 will be abolished. To ensure that the measure helps first-time buyers in high-price places like London, stamp duty will also be axed on the first £300,000 of a purchase price up to £500,000 – an effective reduction of £5,000.
This means a stamp duty cut for 95% of first-time buyers who pay stamp duty, and 80% who would pay no stamp duty at all.
“When we said we would revive the home owning dream in Britain, we meant it,” said Hammond.
The housing crisis
“House prices are increasingly out of reach for many,” said Hammond. “It takes too long to save for a deposit and rents absorb too high a portion of monthly income. So the number of 25 to 34-year-olds owning their own home has dropped from 59% to just 38% over the last 13 years.”
In Manchester recently, Theresa May pledged to the younger generation that she would fix the problem.
Hammond said he wanted to change the concept that getting on the housing ladder is just a dream of our parents’ generation, making it a reality for future generations as well.
He claimed housebuilding is now at its highest level since the financial crisis, a “remarkable achievement”.
Hammond said that solving the challenge will require “money, planning reform and intervention”.
The government will commit at least £44bn over the next five years of capital funding, loans and guarantees to boost the supply of skills, resources and building land and create financial incentives to create more homes.
The aim is to build 300,000 new homes a year until the mid-2020s.
There will also be extra money for the Home Builders Fund in order to get SME housebuilders building again.
The Northern Powerhouse
“Today, we back the Northern Powerhouse, the Midlands engine and elected mayors across the UK,” said Hammond in his speech.
The Autumn Budget set out the launch of a £1.7bn “transforming cities fund”, half of which will go to elected metro mayors.
Hammond also announced the development of a local industrial strategy with Manchester, as well as deals in the West Midlands and north of the Tyne, with a focus on devolution to the regions. He vowed to give “power back to the people of Britain” and drive prosperity across Britain.
Around £30m will also be used to improve digital connectivity on Transpennine routes.
Kensington & Chelsea will receive a further £28m to support Grenfell Tower survivors, including mental health services funding and regeneration of the area.
“We must ensure nothing like it happens again,” he said, adding that all councils and housing associations must carry out all necessary safety works as soon as possible.
“If any local authority cannot acces funding to pay for essential fire safety work they should contact us immediately.”
In his Budget, Hammond asserted that it is “not right to leave houses empty when so many are desperate for place to live.”
He added: “We will give local authorities the power to charge a 100% council tax premium on empty properties.”
He also said there would be a consultation on barriers to longer tenancies in the private rented sector, to look at how best to encourage landlords to offer longer tenancies to those tenants who wanted more security.
To tackle homelessness, the government will also invest £28m in three new Housing First pilot schemes in the West Midlands, Manchester and Liverpool.
Planning reform will focus on urban areas where people want to live and where the most jobs are created, using urban land while protecting the greenbelt. The government wants homes built in high-demand areas and around transport hubs.
Hammond said the government needed to look at the gap between planning permissions and building, as there are too many unused planning permissions. In London alone, there are 270,000, he said.
The government will kick-start five new garden towns to attract long-term capital investment from around world.
Hammond also said the government is committed to building homes in the Oxford-Cambridge corridor, and infrastructure will be built to support new homes.
There will also be £10bn invested in the Help To Buy scheme, to help young people to own homes.
Hammond said that a more will be done to help low-income households in areas where rents have been rising fastest. He acknowledged that, in the long run, the answer is increasing the number of houses.
In the meantime, the government will be increasing targeted affordability funding by £125m over the next two years – which is a measure to allow some councils to increase housing benefit for tenants renting from private landlords.
“We understand the frustrations of families whose budgets are under pressure,” he said.