Autumn Budget 2018: New Help to Buy scheme to be launched for first time buyers

On Monday it was announced from the government that a new Help to Buy equity loan scheme for first-time buyers will be launched in April 2021. The scheme will feature regional price caps, and come alongside reforms to stamp duty for shared ownership users, capital gains tax changes for landlords and extra funding for house builders. It has enabled developers the visibility needed to plan their land purchase requirements, and while the government has stated that there will be no extension after 2023, these schemes have already been extended twice.

New Help to Buy scheme for first-time buyers

The current help to buy equity loan scheme is due to end in March 2021, a new version will be launched with regional price caps. The scheme, which will run for two years until March 2023, will only be available to first-time buyers.

The new scheme will have a higher price cap, which will be 1.5 times the current average first-time buyer price in each region. With South West capping at £349,000 and London at the maximum of £600,000. The government says it has no plans to continue offering Help to Buy equity loans after March 2023.

£500m for housing infrastructure fund

Given that the major house builders cannot make up the shortfall in housing the British Business Bank will provide guarantees on up to £1bn of loans to small and medium sized builders, with an additional £653m going towards strategic partnerships with nine housing associations. The budget announcements also included a further £500m for the housing infrastructure fund, to unlock up to 650,000 new homes. The government has also agreed to reduce planning restrictions in order to make it easier to convert shops into homes.

First-time buyer stamp duty cut extended to shared ownership

The government will also extend stamp duty relief to first-time buyers purchasing shared ownership homes priced up to £500,000 backdated to include those who have bought since 22nd November 2017.

Currently, buyers who use a shared ownership scheme can either pay duty on their share of the property (if it costs more than £125,000 threshold) or on the whole value of the property (including the portion they haven’t bought yet but may buy further down the line.

Under the current system, those who chose the former would previously have missed out on the first-time buyer stamp duty relief. So, assuming you’re buying 50% of a home priced at £350,000 and only plan to pay stamp duty on your initial share.

– You share costs 175,000, meaning you’d need to pay stamp duty on the amount over £125,000 threshold, that’s £50,000.

– On this £50,000, you’ll have needed to pay stamp duty at 2% that’s £1,000.

Under the new system, the buyer wouldn’t need to pay this £1,000 charge. The cut to stamp duty for first-time buyers was originally announced in last years budget, and the chancellor says it has so far helped 121,500 buyers.

Non-resident stamp duty collection

The government will publish a consultation in January 2019 on introducing a 1% stamp duty surcharge for non-resident buying a home in England and Northern Island. Whilst stamp duty relief has also been extended, backdated to November 2017, on first-time buyers purchasing shared ownership homes, with an upper limit of £500,000.

Capital gains tax changes for landlords

The Chancellor says that the government will improve private residence relief on capital gain tax. From April 2020, letting relief will be reformed so that it will only apply when the owner of the property I in shared occupancy with the tenant. The landlord capital gains tax exemption on the final 18 months before a property is sold will also be cut to nine months. These changes will be subject to a consolation