The challenges for the UK in providing a roof over the population’s head are well noted. Not enough houses being built, and first-time buyers can’t afford to get on the ladder.
However, in this year’s Budget, first time buyers were the main beneficiaries after stamp duty was cut on properties up to £300,000. There’s extra help for London based first-time buyers with their stamp duty, whilst there has been a commitment from the Chancellor to spend £44bn in government support to boost construction to meet target of building 300,000 new homes a year by the middle of the next decade. Planning delays will also be reviewed and pushed through.
Do we think these agenda items will work? Time will tell. With wage growth at 2.1%, whilst inflation is 3% it means – in real terms – there’s a wage cut for most. Interest rates have increased to 0.5% in recent weeks meaning a mortgage will cost more from a lender and there’s still the proverbial elephant in the room; the deposit required of the first-time buyer.
A deposit required – depending on the lender – varies between 10-15%. 10% on a property of £299,950 would be £29,500. Even if a couple were moving together that’s £15,000 each. With wage growth down, how can a young person afford that? It’s been asked before and will be asked again. Can Bank of Mum and Dad afford that?
It was a wide ranging that has been warmly applauded by media. What were the main points of Rt Hon Philip Hammond’s second Budget? All is revealed below:
The state of the economy
- Growth forecast for 2017 downgraded from 2% to 1.5%
- GDP downgraded to 1.4%, 1.3% and 1.5% in subsequent years before rising to 1.6% in 2021-22
- Productivity growth and business investment also revised down
- Annual rate of CPI inflation forecast to fall from peak of 3% towards 2% target later this year
- Another 600,000-people forecast to be in work by 2022
- £3bn to be set aside over next two years to prepare UK for every possible outcome as it leaves EU
Stamp duty and housing
- Stamp duty to be abolished immediately for first-time buyers purchasing properties worth up to £300,000.
- £44bn in government support to boost construction to meet target of building 300,000 new homes a year by the middle of the next decade
- Tax-free personal allowance on income tax to rise to £11,850 in April 2018
- Higher-rate tax threshold to increase to £46,350
- National Living Wage to rise in April 2018 by 4.4%, from £7.50 an hour to £7.83.
Business and digital
- VAT threshold for small business to remain at £85,000 for two years
- £500m support for 5G mobile networks, fibre broadband and artificial intelligence
- £540m to support the growth of electric cars, including more charging points
- A further £2.3bn allocated for investment in research and development
- Rises in business rates to be pegged to CPI measure of inflation, not higher RPI
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