First-time buyers planning to purchase properties over £125,000 are among the biggest overall winners of this week’s Budget, said Linley and Simpson’s Head of Residential Sales, Mark Christopher.
Chancellor Philip Hammond unwrapped an early Christmas present for those looking to move onto the property ladder by abolishing stamp duty with immediate effect.
The reform sees the tax scrapped on all properties worth up to £300,000. Previously, first-time buyers had paid the levy on homes over £125,000.
This ranged from two per cent to five per cent on every Pound over that threshold depending on the value of the property.
According to leading Yorkshire estate agents, Linley & Simpson, the move will effectively result in no first-time buyers in the county paying stamp duty.
“In the Yorkshire marketplace, very rarely do we see first-time buyers eyeing up properties valued over £300,000,” said the independent agent’s Head of Residential Sales, Mark Christopher.
“Where it will make the greatest difference is among the growing number of first-timers – particularly couples – looking to purchase a home more than £125,000.
“So for example a £200,000 property would have landed the purchaser a tax demand of £1,500. This bill has now been abolished for first-time buyers.”
He added: “We welcome this move, especially as it is a permanent measure and not – as had been predicted ahead of The Budget – a temporary one.
“It will help to stimulate, and add a different dimension to, the market here in Yorkshire.
“We expect to see more first-time buyer purchases as a result, particularly of homes in the sought-after £125,000 to £250,000 bracket.
“The money they save in tax will help the bigger, upfront cost of a deposit more affordable.”
The agency stressed it is important to remember that a first-time buyer is defined as someone who has never owned freehold or leasehold property before, and who is purchasing their only or main residence.
So if buyers have sold up and rented for a year or two, they would not qualify.
And for joint purchases made by couples, both parties need to meet this first-time buyer definition laid down by The Treasury.
Steve Harris, regional director for Mid Market Banking in Yorkshire at Lloyds Bank Commercial Banking, said: “We spoke to local businesses ahead of the Autumn Budget and almost two thirds wanted the Chancellor to pledge further investment in transport and infrastructure, making today’s announcement welcome news for many business leaders.
“Last year, the Government announced £1.8bn investment to improve roads and railways, so many businesses will welcome the Chancellor’s confirmation of £300m commitment to improving the north’s railway infrastructure.
“The package of support for housebuilders that was widely trailed before the Budget will be welcomed by businesses, especially those policies that are designed to help smaller developers share in the opportunities available.
“Action to simplify the planning system, allocate land to smaller developers and underwrite loans could all help to accelerate the pipeline of new homes in Yorkshire.
“The measures announced to improve technology could give the region’s productivity a boost and businesses will be encouraged to hear the Chancellor announce further details about 5G coverage, particularly as a third (32 per cent) of firms we spoke to wanted the Government to commit to improving broadband access across Yorkshire.
“Business owners in the region will be able to further benefit from R&D tax relief with the Chancellor laying out plans to simplify the process.”
Philip Clarkson, director of Business Rates, at LSH Leeds, said: “While the Chancellor confirmed what many expected in his Budget, he did have one or two surprises for beleaguered business rates payers. The biggest of which was his decision to reverse the hugely unpopular ‘staircase tax’, following which there was a definite sigh of relief that swept across those affected.
“One has to wonder whether this was due in part to the ever-shrinking workforce at the Valuation Office Agency and their subsequent inability to process the sheer volume of re-assessments necessary or a realisation that the staircase tax decision went much further than the VOA or appellant expected. There will be a change in the law to put things back to a pre decision position.
“The planned introduction of more frequent revaluations, which will start from 2022 then every three years thereafter, will be welcomed by many.
“However, most had also hoped for a freeze in the multiplier from 1 April 2018 or a cap at say 2%. Alas, it was not to be and, dare I say, we should not look a gift horse in the mouth.”
David Rook, Managing Director, eSale, said: “There was quite a bit in yesterday’s Budget which will have been broadly welcomed across the UK.
“Like a slightly premature Santa Clause, the Chancellor dealt out largesse to motorists by cancelling the planned rise in fuel duty in April; he raised a glass to those looking forward to a tipple or two at Christmas by freezing duty on beers, ciders, wines and spirits; for those thinking of a trip abroad next summer, he announced there would be no increase in short-haul air passenger duty rates nor on long-haul economy rates either.
“But, for those hoping to buy their first home, he saved the best until last. As from today (November 23), first-time buyers will not have to pay Stamp Duty on a house priced below £300,000; for those house hunting in more expensive areas such as London, the first £300k of a home worth up to £500,000 will also be exempt.
“In real terms, that means in excess of 40% of properties on the market will now be free of Stamp Duty for first-time buyers, reducing the cost of purchasing a new home by around £2,500. Great news…
“However, there is a but. With such a sharp rise in house prices over the last decade, the real obstacle most first-time buyers face is raising enough for a deposit. It’s not easy to find an average of £33,000 – and, although any reduction in the cost of buying a home has to be welcomed, some analysts are already asking if it’s enough.
“There’s also the fact that the abolition of Stamp Duty only applies to first-time buyers so, if you’re already on the housing ladder, there’s not quite so much of an incentive to move. You can’t apply for Help To Buy either so perhaps it’s not surprising that some feel a little aggrieved that Mr Hammond’s generosity only seems to be targeted at first-time buyers. There was little or nothing for so-called second-steppers or downsizers.
“At least there were other measures too which could help ease the crisis, not least Mr Hammond’s attempt to get Britain building again. For example, for the first time, the Government seems to have realised that it needs to do more to plug the skills gap and train and recruit more brickies.
“It was also encouraging to see Mr Hammond announce an investigation into why the number of approved planning applications for housing are not correlating with the number of new homes built. If developers are ‘land banking’, then maybe we’ll see sudden surge in construction – and, hopefully, the new properties will be the ones we need and not the three- and four-bedroom “executive” homes which make the most money.
“So, if we had to summarise on yesterday’s announcements we’d probably agree it’s a step – and a significant one – in the right direction. However, Rome wasn’t built in a day – and it’s very unlikely Britain will be either.”
Mike Cherry, Federation of Small Businesses (FSB) National chairman, said“With costs rising and consumer demand flagging, small firms will welcome today’s business-friendly Autumn Budget.
“It was good to see the Chancellor’s speech acknowledge our concerns about the VAT threshold. Dragging thousands of more small firms into the hugely complex VAT regime would have caused a significant drag on output at an already challenging time for businesses. We look forward to working with the Government to reform this burdensome tax. Small firms spend more than a working week a year complying with VAT obligations on average. It’s time that should be spent growing their firms.
“The promise to tackle VAT evasion by online overseas sellers is welcome. No business should be gaining an unfair advantage by evading tax.
“The end of the staircase tax will throw a lifeline to thousands of small firms that had no time to prepare for this completely unfair and retrospective levy. The Chancellor has done the right thing by reinstating original business rates bills. We hope the end of the staircase tax marks the first step towards wholesale reform of the regressive business rates system.
“FSB has campaigned for CPI-indexation of business rates bill increases for months now and it’s good to see that the Chancellor has listened to the small businesses that would have been hardest hit by an RPI-linked increase.
“A move to three-yearly revaluations will go some way to making the rates system fairer over the long term. However, the delivery of this pledge must be carefully thought-through. It can’t be allowed to inadvertently place additional burdens on small firms or require them to hire a surveyor just to get their bill right.
“It was encouraging to see the Chancellor acknowledge the vital role that small housebuilders will play in solving the housing crisis. The £1.5 billion extension to the Home Building Fund marks a promising starting point for making that solution a reality. The promise to invest £630 million to help more building on small sites, along with greater attention on upskilling UK construction workers, is also much needed. Small housebuilders need better access to finance and better access to land. This Budget will help make that happen.
“The Government’s sensible approach to IR35 is welcome. We told the treasury that it can’t roll out the changes applied in the public sector to the private sector until there is clear evidence of its impact to date. We look forward to feeding in to a consultation on this issue and ensuring the rights of the genuinely self-employed are protected.
“With the Brexit clock ticking, other nations are trying to tempt our small firms to their shores. We absolutely have to make the UK the most attractive place in the world to invest in innovative firms. Today’s announcement of an additional £2.5 billion for the British Business Bank to continue their vital work in facilitating access to finance for small firms will help make that happen. Freeing up pension funds to put more money behind innovative small firms will also add to our international competitiveness.
“FSB welcomes the increase in the Enterprise Investment Scheme (EIS) allowance. This will encourage more investment in the fast growing businesses that drive productivity growth. Moves to eradicate misuse of the scheme for capital preservation are also welcome as long as they don’t affect genuine investments in small, rapidly growing businesses.
“FSB has always supported the need for minimum wage increases that our economy can afford. It’s good to see the Government showing flexibility in its approach to increasing the National Living Wage, while respecting recommendations from the Low Pay Commission and the advice from FSB.
“Extending the national productivity investment fund for a further year and upping R&D investment is clearly needed given today’s revised OBR forecasts. However today’s announcements will largely be to the benefit of large rather than small firms and we need to ensure that smaller business can also benefit from R&D investment. Equally, simplification of R&D tax credits is long overdue.
“Increasing Vehicle Excise Duty (VED) on new diesel cars may come as a frustration to some but it’s good to see the Chancellor recognise the unique circumstances of van users. These vehicles are crucial to the success of thousands of local businesses. The freeze on petrol and diesel duty at a time of spiralling costs is much needed.
“The £1.7 billion Transforming Cities Fund will be key to accelerating delivery of the Northern Powerhouse and Midlands Engine initiatives. An injection of urgency into these projects is certainly needed and a second devolution deal for Birmingham and a commitment to Tyne and Wyre infrastructure will send us on the way. Devolution can provide a huge boost to local small firms when executed effectively.
“It’s encouraging to see the Government making a meaningful investment in upskilling our workforce. Particularly welcome is the announcement of £30 million for digital skills and long-distance learning.
“£3 billion of Brexit contingency planning and a promise to step-in to replace EIF funding provides some reassurance. Of course what we really need is the swift agreement of a time-limited interim period. Only then can small firms start to plan again for the future. ”
Commenting on today’s Autumn Budget, Paul Stokey, head of office for Shoosmiths Leeds said: “Infrastructure investment and strong transport links to increase mobility and ensure talent can be drawn from all corners of the North is essential to the success of businesses based here; it has certainly played a central role for Shoosmiths Leeds during our first 12 months of operation.
“Therefore, having greater clarity around the level and nature of investment that cities in the region will be allocated from the £1.7 billion Transforming Cities fund is exceedingly important in assuring the region that it remains a Northern Powerhouse priority.
“We are pleased to hear the announcement of £30m to trial new solutions on the TransPennine route to improve mobile and digital connectivity on trains, adding some credence to the Government’s pledge to level North/South economic disparity and boost connectivity. However, this is a drop in the ocean and more must be pledged to ensure the region’s continued prosperity.
“We now hope that Monday’s Industrial Strategy White Paper will add further momentum to the Northern Powerhouse agenda.”