Autumn Statement 2015: What You Need to Know

Key points from the Autumn Statement and spending review that new home buyers or home owners need to know…

Today George Osborne delivered his Autumn Statement which marks his third and final budget announcement of the year.

Here are some of the key points from the Autumn Statement and the surrounding news that you need to know as a new home buyer or indeed a home owner…

First up, Chancellor Osborne has pledged almost £7bn to make house building a priority. 

His aim is to accommodate over 400,000 “affordable homes” to be built in England.


This is an impressive figure but critics point out that 84% of that number is based on previously announced policies.

Further reactions to that pledge include a comment from Julie White, chief executive of D-Drill. Speaking to Wake Up To Money, Julie noted that meeting Mr Osborne’s target of 400,000 homes will be a huge challenge thanks to a growing skills gap in the construction industry.

However, the big builders are already seeing the positive financial effects of this news. London’s blue chip share index was up approximately 0.8% this morning thanks to construction firms and property developers like Persimmon, Taylor Wimpey, Barratt Developments and Berkeley Group Holdings who all saw a 3% or higher increase in their shares

Of those 400,000 new homes, 200,000 are to be starter homes, which will be sold at a 20% discount to help first time buyers and those under 40 get on to the property ladder.

135,000 will be part of the brand new Help-to-Buy: Shared Ownership scheme.

Other good news for potential new homebuyers includes the launch of the Right To Buy scheme from housing association tenants. This extension of the Right To Buy scheme begins at midnight tonight in a pilot including 5 housing associations.

The chancellor also announced a new London Help-to-Buy scheme. In the new scheme,  Londoners with a 5% deposit will be able to get an interest free loan worth up to 40% of the value of the newly built home they’re buying. This effectively doubles the 20% interest free loans currently available under the Help-to-Buy scheme.

While the chancellor has worked hard in this spending review to make buying a new home easier, he has also taken steps to make buying a second home harder. There will be a 3% increase in stamp duty for buy-to-let properties and second homes, which will be effective from next year.

This has led to the National Landlords Association responding with their Chief Executive Richard Lambert commenting that “if George Osborne wants to “wipe out” buy-to-let, he should just say so”.

And that “the exemption for corporate investment makes this effectively an attack on the small private landlords who responded to the housing crisis by putting their own money into providing homes by the party that they put their faith in at the election."

The third element of the Chancellor’s plan to meet housing demand is to accelerate the speed of housing supply by releasing land suitable for 160,000, re-designating unused commercial land for starter homes and extending loans for small builders. 

In short, the Chancellors spending review has delivered:

  1. A doubling of the housing budget
  2. 400,000 new homes, with extra support for home buyers in London
  3. Estates regenerated
  4. Right to Buy rolled out
  5. Paid for by tax on buy-to-lets and second homes
 

“For we are the builders”. 

 

So it is looking like good news for home buyer’s in the future but what about home owners?

George Osborne announced that “we’re going to build one of the most digitally advanced tax administrations in the world”, meaning that every small business will have access to their own digital tax account by the end of the decade so tax can be managed online.

What this means for homeowners is that from 2019, Capital Gains Tax will have to be paid within 30 days of completion of any disposal of residential property.

Home owners can also expect to see a potential rise in their council tax bill as local authorities will be extended powers to levy a new social care precept of up to 2% on council tax. The money is to cover what will need to be spend on adult social care.

Finally on a positive note, the chancellor announced that a new, cheaper domestic energy efficiency scheme will be introduced to replace ECO.

This new energy scheme will save on average £30 a year from the energy bills of 24 million households.

Insurance bills are also set to fall as reforms to our compensation culture are to be brought forward. In particular the cost of providing motor insurance is to be decreased by £1bn, a decrease the government expects the industry to pass on to motorists saving on average £40-£50 on insurance bills.

For full details on Chancellor George Osborne’s Autumn Statement and Spending Review, you can find a full transcript of his speed on the government website here

 

Publish date: 19/02/2016