Chancellor Jeremy Hunt has delivered his "Autumn Statement for Growth" setting out the government's tax and spending plans for the year ahead. And while there was plenty to digest and lots of talk about growth, this is likely to be seen again as another missed opportunity to address the obvious issues plaguing the housing market.
Stamp Duty
Under the current rules, Stamp Duty is not paid on homes up to the value of £250,000 - with the threshold scheduled to roll back to £125,000 on the 31st of 2025 and first-time buyers exempt from the tax unless their property is worth more than £425,000.
Between £250,001 and £925,000, tax is charged at 5%. Between £925,001 and £1.5m it doubles to 10% and above £1.5m it rises again to 12% of the purchase price.
Second-home buyers and landlords are taxed an additional 3% on top of these rates.
Data from Rightmove shows how the proportion of homes on the market was affected by the various Stamp Duty thresholds.
- 62% of homes on the market are currently exempt from stamp duty for first-time buyers (anything £425,000 or below)
The percentage of properties that are on the market and their different stamp duty bands:
- £250,000 and below – 29.3% of properties
- £250,001 to £925,000 – 62.4% of properties
- £925,000 - £1.5 million – 5.1% of properties
- Anything above £1.5 million – 3.2% of properties
So what has changed?
Despite all the rumours of some form of announcement being made on Stamp Duty, this didn't get a look in. So as it stands, nothing has changed as yet, but expect the rumour mill surrounding this to kick back into life ahead of next year's Budget.
Mortgage guarantee scheme
Designed primarily to help first-time buyers, the mortgage guarantee scheme enables lenders to offer up to 95% loans on properties up to the value of £600,000. The scheme was introduced in April 2021 and extended in January 2023 and follows on from 2013's Help to Buy: Mortgage Guarantee Scheme.
Has anything changed?
The Mortgage Guarantee scheme will be extended for an additional 18 months until the end of June 2025 to continue helping prospective borrowers with smaller deposits buy a home.
Mortgage Interest Tax Relief
Since April 2020, landlords have not been able to deduct any mortgage expenses from their rental income to reduce their tax bill. Instead, they now receive a tax credit, based on 20% of their mortgage interest payments.
This particularly affects higher-rate taxpayers, who effectively received 40% tax relief on mortgage payments.
Landlords have been targeted by the Government for almost a decade, with a seemingly never-ending wave of punitive measures designed to dissuade people from investing in rental properties resulting in a shortage of rental stock as landlords exited the market. This has been compounded by soaring interest rates and has pushed rental prices to eye-watering levels, so some positive news here would be welcomed by landlords and tenants alike.
What has changed?
Landlords will still be feeling like they are stuck in limbo as there was no mention of tax relief or support for landlords.
How was housing addressed?
Aside from the 18-month extension to the Mortgage Guarantee Scheme, briefly.
There was announced support for people on low incomes with housing by unfreezing Local housing allowance, with the rate increasing to the "30th percentile of local market rents"
The Chancellor said: "This will give 1.6 million households an average of £800 of support next year."
Housebuilding
£450m allocated to local authority housing fund to deliver "2,400 new homes"
With no dedicated policies mentioned to boost property transactions, this Autumn Statement will be viewed by homebuyers, homeowners, and landlords, as another missed opportunity that provides little relief.
