Budget 2016: Help for first-time buyers and clarity for landlords


Today’s Budget has thankfully delivered few shocks for the property sector but there were a few announcements that will affect first-time buyers and landlords.

Lifetime ISA

Those under 40 will be able to use a new Lifetime individual savings account (ISA) to save up for a home or pension. To be launched in April 2017, savers will be able to put in up to £4,000 a year, with an annual bonus of £1,000 coming from the government. Help to Buy ISAs can be rolled into the Lifetime ISA.

The Lifetime ISA is welcome as it should encourage saving but if property prices keep rising at the same rate as they have been, it is still going to be incredibly difficult for first-time buyers to get onto the housing ladder.

There is a £450,000 limit on any property purchase which will exclude many homes in London and the south-east, and unless this limit rises on a fairly reasonable basis, it will be of limited use to those buying in more expensive areas. The problem of supply remains an issue and unless more homes become available, property prices won’t be kept in check.

3 per cent stamp duty surcharge

The Chancellor also announced that the 3 per cent stamp duty surcharge on purchases of additional properties from April will apply to larger investors as well as accidental landlords. It was thought that larger landlords would be exempt but they, as well as those buying property via a limited company, will have to pay the extra tax.

Even so, buying property through a limited company is likely to become the sensible way forward for those investors wanting to continue to benefit from mortgage interest tax relief. But lenders must catch up with the changing face of buy-to-let as most offer few options on the mortgage front for those buying via a company. This will have to change – and quickly – if lenders wish to grow their buy-to-let lending book.

There was some good news for those who have an overlap between two properties – perhaps they haven’t been able to sell one before buying another. The grace period has been extended from 18 to 36 months, during which owners can claim a refund on the higher stamp duty rates. This will give owners more time to sell up, reducing the pressure on them.

Jonathan Harris
Posted by
Jonathan Harris