2011 Budget - Housing

publication date: Mar 31, 2011
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author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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2011 Budget - Housing


Not particularly an exciting day for home owners, buyers, sellers or renters, but that’s to be expected when we are in a recession and budgets are being cut!

There is some good news though:-

Help for First Time Buyers
A £250 million scheme to help first-time buyers who want to buy a new-build property but can’t afford the high deposits has been launched. Under the First Buy scheme, the Government will provide loans, jointly funded with house-builders, to help first-time buyers with the deposit for a new-build house.

The scheme should help 10,000 families to get onto the housing ladder for the first time - visit the Directgov website for more information.

Kate Faulkner’s comments on Housing for the Budget
Although the idea of helping first time buyers in this way sounds great, it’s a drop in the ocean for the number of potential buyers out there and is most likely to benefit people in more expensive areas. Overall, 10,000 extra first time buyers is only an extra 5% on the number we have now.

What fFirst time buyers really need is good value mortgages with low fees and low deposit requirements and better still good loans for those that make the effort to save for the deposit.

This idea though is mostly good news though for house builders who desperately need help while the market is so poor and we are so short of homes. 10,000 more new build homes sold to first time buyers would account for around 10% of new homes currently being built.

A long term solution needs to be adopted and this is to help first time buyers by building more affordable homes in and around areas where people want to live. More stock helps equalise supply and demand and this is the ONLY way of stopping prices shooting up again! 

Mortgage Interest Scheme
This is a scheme to help people who have lost their job and temporarily need assistance to stay in their home. The budget merely announced that this scheme will be extended until January 2013. It is working though and is expected to help around 100,000 'out-of-work' homeowners.

According to Directgov “The 13-week waiting period and £200,000 limit on eligible mortgage capital will now remain in force for new working age SMI claimants until January 2013.”

Real Estate Investment Trusts
This is an interesting one. The government states it is looking to make it “easier to set up and more accessible to investors” so they can encourage “investment in the private rented sector over the longer term”.

The changes will for example, allow anyone “buying a block of residential properties to pay SDLT by reference to the appropriate SDLT rate applicable to the average value and not the aggregate value”*. The intention is to encourage investment via buy-to-lets in residential property.

How this works is being consulted on by the Government with the express intent of “reducing the barriers to entry and investment and reducing the regulatory burden, with legislation to be included in the Finance Bill 2012.”**

*Source: PWC 2011 Budget Summary
**Source: Shoosmiths 2011 Budget Summary

Also there are three ‘new’ initiatives about to come into play from previous budgets:-

  1. An increase to 5% Stamp Duty for all homes over £1mn
  2. Furnished holiday lettings losses can only be set against furnished holiday lettings income (as opposed to everything you earn) from April 2011.
  3. Housing benefit caps will apply from April 2011, although these are expected to only impact London and parts of the south east and west. 

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