Budget 2018: Great News For FTBs But Bad News For Landlords

First-time buyers in the UK have been given a helping hand from Chancellor Philip Hammond in his last budget before Brexit.

However, the move comes at the expense of landlords and others who own several properties.

The Chancellor’s announcement sees stamp duty being scrapped for all FTB’s who are purchasing a shared ownership home that’s worth up to £500,000.

First-time buyers in England currently do not pay stamp duty on the first £300,000 of a property and pay 5% duty on the property’s value between £300,000 and £500,000.

Now all first-time buyers, including those FTBs who are opting to purchase a shared ownership home which sees the buyer buy part of the property while renting the rest, can enjoy this benefit.

House buyer can ‘staircase’ their equity over time

These schemes are popular because the house buyer can ‘staircase’ their equity over the years so they can eventually pay for the rented part of their home.

Chancellor Philip Hammond says this extension will also be retrospective so for those who haven’t claimed first-time buyer’s relief previously (but did buy a property between 22 November last year and 29 October this year) can claim a stamp duty refund.

According to the government, this opportunity of offering a retrospective refund will cost £5 million.

However, while this appears to be good news for first-time buyers, landlords can be forgiven for feeling the pinch.

Government has targeted landlords several times in recent years

The government has targeted landlords several times in recent years with a 3% stamp duty surcharge, the phasing out of mortgage interest rate relief and scrapping the wear and tear allowance.

Now, landlords will be prevented from claiming the £40,000 lettings relief on their capital gains tax (CGT) bill when selling a property except where the property owner has a lodger living with them under the government’s Rent-a-Room scheme.

The government says this will help ensure that the relief, which is in place to prevent the paying of CGT when selling a home, is used properly.

Mr Hammond says he wants to keep ‘a family home out of CGT’ and adds that some people are claiming relief when selling a home that is not their main residence.

The Chancellor has also revealed that the Help to Buy scheme will end in 2023 – which is a two-year extension – and that £675 million will help councils transform unused high street shops and commercial buildings into new homes.

‘Positive step in addressing the housing crisis’

The move has been welcomed by the Federation of Master Builders who it is a ‘positive step in addressing the housing crisis’.

The organisation reckons that up to 400,000 new homes could be created by converting empty spaces above shops.

There’s also £500 million to help councils build new homes under the Housing Infrastructure Fund which could lead to 650,000 more properties being built.

The government is also going to lift the cap on a council’s ability to borrow money when building council homes.

This comes after recent news that there are fewer cash buyers for properties and the number of homes available for sale is at a 10 year low.