With Brexit looming the Chancellor didn't have a much room for manoeuvre. However, as widely expected he has extended Help to Buy for a further two years, now ending in 2023. The policy has proved popular with home buyers, with 145,000 new build homes bought with the equity loan option from its inception in 2013 to March 2018. The policy allows a client to buy a new build house with the aid of a five year interest free equity loan. The loan is up to 20% in England and Wales and 40% in London. After five years, interest is charged on the loan.
House builders certainty like the policy and it has been accused of driving up prices. However it has helped a significant number of people to buy when they almost certainty would not be able to afford to.
The key thing to remember, if you plan on buying via Help to Buy, is how you are going to repay the equity loan after the five years; it could become very expensive as interest is charged on a potentially increasing loan amount (the level of loan is based on the current value of your property, not the amount borrowed).
The other key area that Philip Hammond delved into was extending the stamp duty holiday for first-time buyers purchasing shared equity properties up to £500,000. This on its own, I don't think, will encourage someone to buy a first home, but it’s a nice bonus for first time buyers who are scraping together a deposit.
So no new bells and whistles for people buying, but a huge sigh of relief for landlords as no further changes to tax for their portfolios have been announced.
Of course, dependent upon Brexit the above could all change.
If you would like to review your current mortgage, or if you are considering buying then please do not hesitate to contact Alistair using the details below.
Alistair Hargreaves
Financial Consultant
Tel: +44 (0) 203 205 2129
Mob: +44 (0) 0796 750 9318
Email: alistair@arcandco.com
