As Chancellor of the Exchequer Philip Hammond announces his Autumn 2017 Budget we examine what effect it will have on London property.
One change which was announced during Philip Hammond’s speech this afternoon relates to houses which are left vacant. Previously local councils could charge a 50% homes premium on homes left vacant. This has been doubled, and councils will now be allowed charge a 100% empty homes premium for those properties which are unoccupied for extended periods of time. The Royal Borough of Kensington and Chelsea estimates that over £500m worth of residential homes are left empty in the area. These houses which were left empty for two years were once charged £85,000 for this, under the new legislation they could be fined up to £170,000 over the same period. This will influence the high net worth individuals who own such homes as they will pay higher fees for leaving their homes empty. However, this is still unlikely to discourage most wealthy people from purchasing Prime Central London homes.
A very significant change was also announced regarding Stamp Duty Land Tax (SDLT) for first time buyers. This new legislation was created with the aim of helping more people get on the housing ladder. The new policy abolishes SDLT payments for residential properties under £300,000 for first time buyers. Additionally, first time buyers who are purchasing a house for £500,000 or less also do not pay stamp duty up until £300,000. This is to ensure that people living in more expensive areas such as London are not left out by this abolition of stamp duty for many first-time buyers.
It is believed that the typical first-time buyer would save a maximum of £5,000 on their purchase. This will help make housing more affordable for many Londoners. The result of this legislation could be more young people owning their own home. According to the government’s own figures, home ownership amongst the young has dropped to 38%, down from 59%.
The government also aims to reinvigorate the housing market by allocating more funding to building new residential properties. Philip Hammond announced plans to spend £44bn on building new housing. The government claims that this will result in the fastest rate of new homes being built since the 1970s. This extra property building will hep alleviate shortages of housing in key parts of London and the rest of the UK. It is hoped that this will mean an increased supply of housing for London’s rapidly growing population.
At Robert Irving Burns, we have seen many changes in the property market. It will be interesting to see how these alterations to existing legislation will affect London property and we remain ready to adapt and thrive in an ever-changing environment.
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