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Budget 2017 - a Must-Read for First-Time Buyers

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In his budget, the Chancellor Philip Hammond confirmed that the government would be making changes to the amount of money due to HMRC by first-time buyers.

The big announcements are that stamp duty will be abolished for first-time buyers on property purchases up to £300,000. The Chancellor has also confirmed that in areas of high-cost housing where property purchases are over £300,000 (but under £500,000), the first £300,000 of the purchase cost will be free of stamp duty.

While we can be certain that any reduction on stamp duty is good news for first-time buyers, there are probably individuals out there who have questions as to whether they qualify for one (or both) of the above initiatives. We’ve attempted to assist by answering some of the more pressing questions below.

 

Am I a qualifying first-time buyer?

The government guidance confirms that a first-time buyer is defined as “an individual or individuals who have never owned an interest in a residential property in the United Kingdom or anywhere else in the world, and who intends to occupy the property as their main residence.”

 

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Business Rates - Some Good News

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There was a small, early Christmas present in the autumn budget proffered by Mr Hammond last week with regards to business rates.

Firstly, the government has opted to base the annual increase to business rates on the Consumer Price Index (CPI) as opposed to the Retail Price Index (RPI). The change was planned for 2020 but has been brought forward to 2018. Lots of payments are linked to inflation – pensions, benefits, index-linked savings…The higher the inflation figure, the higher the payments. RPI almost always gives a higher figure for inflation than CPI does, thus the change from RPI to CPI should result in lower business rates.

Secondly, it has been announced that rateable values will be recalculated every three years as opposed to every five years. Many small businesses were hit hard by steep rises when rateable values were recalculated in 2017 when the first revaluation in seven years took effect, some businesses faced an increase of more than 100%. The proposal to carry out the revaluation every three years should spread any increase and smooth spikes in the revenues generated.

There has also recently been a promise to scrap the so-called “staircase tax” which potentially placed an additional burden on businesses in offices linked by a communal lift, staircase or corridor by treating them as occupying two or more properties rather than one. Liabilities were being backdated to 2015 and resulted in large bills for some companies. Fortunately, the Supreme Court has intervened following a challenge and the legislation has been consigned to the scrap heap.

Whilst many were hoping for a freeze on business rates for the foreseeable future the budget does go some way to give confidence to SME’s at least as regards some of their property outgoings.

 

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Christmas Come Early for First-Time Buyers?

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‘Tis the season where the Chancellor Philip Hammond brushes off his red briefcase and announces the Autumn budget. Our Solicitor Richard Collins breaks it down.

Hammond bestows gifts and favours on those he deems most worthy, whilst threatening lumps of coal for those he does not. In previous years the Budget has been heavily focused on the housing market and this year has been no exception. The headlines for the 2017 budget is are;

  • The Government is to legislate on a proposed 100% Council Tax premium on empty properties;
  • Aims for 300,000 new homes (annually) promised until the mid-2020s;
  • Review commissioned into the reasons why planning permissions granted don’t turn into developments;
  • £44bn for capital funding and loans promised to be promised over 5 years to boost House Building;
  • Stamp duty exemption for first-time buyers on all property purchases up to £300,000.00 and the first £300,000 of properties in London (up to £500,000.00).

Although details are still sketchy so soon after the announcement, we can expect that the plans are aimed at continuing the government’s objectives on addressing the shortage of affordable homes for the young and the first time buyers, whilst also making the acquisition of a buy-to-let portfolio significantly more unappealing to your average investor. We’ll reserve judgement on whether the Chancellor’s plans will achieve this ambition (and we’ll leave the discussion as to if this the correct course in any event until further details are available). One thing that we can be certain of is that if the Chancellor’s proposals have half the impact of these previous initiatives, it may be a good time to obtain some specialist legal advice if you are planning a home purchase.

Talking locally about the news that stamp duty will be exempt for first-time buyers on properties with a value of £300,000 and under, Property Solicitor Richard Collins states:

“The government has yet to provide guidance on the areas that will qualify for the assistance on properties sold for over £300,000.00. If the model reflects the current Help to Buy designations not all of Essex will qualify but Havering could be included. We are currently waiting for the government to provide guidance on the specifics of the plan and will keep all our buyers updated as new information becomes available.”

 

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