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Autumn Budget 2018: new Help to Buy scheme to be launched for first-time buyers

New equity loan scheme will include regional price caps

The government today announced that a new Help to Buy equity loan scheme for first-time buyers will be launched in April 2021.

The scheme will feature regional price caps, and comes alongside reforms to stamp duty for shared ownership users, capital gains tax (CGT) changes for landlords and extra funding for housebuilders.

Here, we give you the lowdown on all of today’s key property announcements.

  • If you’re considering buying a property or remortgaging and want a free consultation on your mortgage options, call Which? Mortgage Advisers on 0800 197 8461 or fill in the callback request form at the bottom of the article.

New Help to Buy scheme for first-time buyers

When the current Help to Buy equity loan scheme ends in March 2021, a new version will be launched with regional price caps.

The scheme, which will run for two years until March 2023, will only be available to first-time buyers.

Prices will be capped at 1.5 times the current forecast average first-time buyer price in each region – with a maximum of £600,000 set in London.

The caps will be as follows:

Region Help to Buy equity loan price cap (2021-23)
North East £186,100
North West £224,400
Yorkshire & the Humber £228,100
East Midlands £261,900
West Midlands £255,600
East of England £407,400
London £600,000
South East £437,600
South West £349,000

The government says is has no plans to continue offering Help to Buy equity loans beyond March 2023.

First-time buyer stamp duty cut extended to shared ownership

The government will also extend stamp duty relief to first-time buyers purchasing shared ownership homes priced up to £500,000 – backdated to include those who have bought since 22 November 2017.

Currently, buyers who use a shared ownership scheme can either pay stamp duty on their share of the property (if it costs more than the £125,000 threshold) or on the whole value of the property (including the portion they haven’t bought yet but may buy further down the line).

Under the current system, those who chose the former would previously have missed out on first-time buyer stamp duty relief.

So, assuming you’re buying 50% of a home priced at £350,000 and only plan to pay stamp duty on your initial share:

  • Your share costs £175,000, meaning you’d need to pay stamp duty on the amount over the £125,000 threshold – that’s £50,000
  • On this £50,000, you’ll have needed to pay stamp duty at 2% – that’s £1,000.

Under the new system, the buyer wouldn’t need to pay this £1,000 charge.

The cut to stamp duty for first-time buyers was originally announced in last year’s Budget, and the Chancellor says it has so far helped 121,500 buyers.


Capital gains tax changes for landlords

The Chancellor says that the government will improve the targeting of private residence relief on capital gains tax.

From April 2020, letting relief will be reformed so that it will only apply when the owner of the property is in shared occupancy with the tenant.

The landlord capital gains tax exemption on the final 18 months before a property is sold will also be cut to nine months.

These changes will be subject to a consultation.

Non-resident stamp duty consultation

The government will publish a consultation in January 2019 on introducing a 1% stamp duty surcharge for non-residents buying a home in England and Northern Ireland.

£500m for housing infrastructure fund

Today’s Budget speech also included a suite of announcements around house-building:

  • The Chancellor pledged a further £500m for the housing infrastructure fund, to unlock up to 650,000 new homes.
  • The Housing Revenue Account cap will be abolished from today, meaning councils will be able to increase house-building to around 10,000 homes a year.
  • £1bn of business bank guarantees will be provided to help small and medium-sized developers.
  • The government will reduce planning restrictions in order to make it easier to convert shops into homes.

 

Your home may be repossessed if you do not keep up repayments on your mortgage.

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