What changes has the Budget 2018 made to Stamp Duty and Shared Ownership?

Given the uncertainty that currently surrounds the property market as a result of factors such as Brexit, the Chancellor’s autumn Budget presented the perfect opportunity to help boost confidence. As many buyers hold back to wait and see what the impact of Brexit will be, the UK property market is a tougher place to be than a few years ago. So, what changes did the Budget deliver for the coming year?

Changes to stamp duty for shared ownership properties

One key change in the Budget involved lifting stamp duty for shared ownership properties valued at up to £500,000. This is designed to remove the obstacle that stamp duty often presents for buyers who may see it as an expense too far when it comes to property purchase costs. For first time buyers there is already a stamp duty holiday on the first £300,000 of the purchase price so this change will apply to anything over and above that. It’s also retrospective so will benefit shared ownership purchasers over the past year too – back to the date of the 2017 Budget.

Currently, the stamp duty rates for first time buyers purchasing UK properties are 0% on the first £300,000 and 5% on the next £300,000.01 to £500,000. As a result of the changes made in the Budget, shared ownership properties will now be exempt from the requirement to pay the additional 5% on whatever amount of the purchase price is over the £300,000 threshold – up to the limit of £500,000. For joint purchasers, both need to be first time buyers to benefit from the new rates.

Other Budget changes affecting the property market

Help to Buy

The government’s Help to Buy scheme is designed to support those who don’t have the size of deposit most lenders would require to offer a mortgage (10-30% of the purchase price). Under the scheme, the borrower must have a 5% deposit and a government-backed loan is provided to essentially make up the difference. The Budget 2018 extended the scheme, which was due to end in 2021, to 2023. However, during the two extension years Help to Buy will only be available to first time buyers (it’s currently open to anyone looking to purchase a new build of a certain value). The Budget also noted that there were now more low deposit mortgages available, designed to help those without significant saved resources to get on the property ladder.

Stamp duty increase for foreign investors

At the same time as stamp duty is being reduced for first time buyers, anyone investing from overseas may find themselves liable to pay more. The Budget introduced a surcharge of between 1% and 3% for foreign investors – on top the regular stamp duty charges that they would have to pay. Given that around 13% of London new builds are bought by people outside the UK, the surcharge could have a big impact.

While not seismic, the changes in the 2018 Budget continue to make it easier for first time buyers to get onto the property ladder. If you’d like to find out about the options in your area, please get in touch with Clarke Gammon Wellers today.