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The Autumn Statement – Good for first-time buyers, but buy-to-let takes a hit

Londoners will be able to get a 40% Help to Buy loan, but there is a stamp duty hike for anyone buying a second home.

Budget 2015

The government’s Autumn Statement mostly focused on plans for deficit reduction, defence spending and the rolling back of planned tax credit reforms.

But Chancellor Osborne had some big surprises for the housing market.

Londoners to get 40% Help to Buy loans

The existing Help to Buy scheme will be extended to 2021 and the available loan will be expanded for London (where the average property price is more than twice that of the rest of the UK) from 20% to 40%.

Help to Buy is available to first-time buyers for new build homes in England with a purchase price up to £600,000. If you can pay at least a 5% deposit the government will lend you 20%, giving you an effective 25% deposit and allowing you to apply for a 75% LTV mortgage.

The new rules means first time buyers in London can get an effective deposit of 45% when purchasing a new build home from April 2016, provided they can raise 5% deposit.

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Restrictions on shared ownership homes removed

The restrictions (i.e. living/working locally, maximum income thresholds, already being a council tenant) on who can by a home through shared ownership across England will be lifted.

From April 2016 anyone who has a household income of less than £80,000 outside London, and £90,000 inside London, can buy a home through shared ownership.

Shared ownership lets you buy between 25% and 75% of a home with your local council. You will pay rent on the rest of the property but this won’t be more than 3% of the amount left.

For example if you buy 40% of a home worth £200,000, you will pay rent on the remaining 60% (£120,000), this cannot be above 3%, so your annual rent won’t be above £3,600.

Discounts on Starter Homes

Osborne committed £2.3 billion to building 200,000 new ‘Starter Homes’ by 2020.

Starter Homes are new build homes available at 20% off the market price. They are only open to first-time buyers under 40.

Stamp duty for second homes

Recognising the strain that buy to let and second homes put on the housing market for first time buyers, Osborne has levied a tax on buying second homes.

So if you are thinking of buying a second home you will have to pay an extra 3% stamp duty as of April next year, regardless of whether you are buying a holiday home or a property to rent out.

Money raised will be used to fund schemes aimed at helping those struggling to buy their first home.

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Right to Buy extended

Right to Buy will now be extended to housing association tenants during 2016, giving 1.3 million households the chance to become home owners.

Renters of council homes have the right to buy their home from the local authority. There are discounts on the home price available in many cases, depending on how long people have lived there.

A small number of housing associations will be piloting the scheme in the next few months.

Read more…

You can read a full summary of the government’s Autumn Statement, or if you’d like to learn more about mortgages and buying a home, our mortgage guides could be a helpful place to start.

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  • Mr Geoff

    I didn’t vote Tory for the buy to let industry to be clobbered. It is the go to sector of choice for many tenants and expansion of this sector should be encouraged, thus increasing competition, holding up standards and reducing rents. Anything that discourages this sector will reduce the supply of rented homes, having the opposite effect those mentioned above. Far too much gov’t intervention. I voted Tory for free enterprise and small government. I am getting the opposite…

    • barometer

      Serve you right. You should have voted for the British National Party, the only party that puts the British people first. Don’t believe everything the BBC tells you. Read its manifesto before the next election.

      • Desmojonic

        Yeah, Hitler had followers like you before the 3rd Reich. They meant well…

        • David Collier

          but sold out to big business, the landed aristocracy and militaristic junkers, all of whom covertly supported their apparently working class credentials yet partly failed to curb their lust for war – but nevertheless did very nicely out of Germany’s defeat, 1945 plus.

  • barometer

    More than a third of MPs are “buy to let” landlords so it makes sense to scrap council houses and housing associations.

    • John Lloyd

      How about the MPs second homes and tenants of private rented houses should have a right to buy with discount I have never had to rent in my life thank god but some of the rubbish the private sector rent out and in a lot of cases at very high rents that the tax payer ends up footing the bill which in turn makes a lot of rich Tory’s

  • Bazza

    Their is only one reason why landlords buy property to let and that is mainly to make an excessive profit for themselves. They do not have the interest of the tenant at heart, the majority of landlords charge excessive rental fees and give very little in return to the tenant, avoiding essential maintenance whenever they can.
    For information, I am not a tenant and never have been, I am an houseowner of a very nice detached property but I have worked in the building trade looking after property maintenance and can say apart from the odd exception the majority of landlords are in the business for their own profit.

    • Trisha Kassandra

      I must have the landlord from heaven ….same rent as when i moved in in June 2005 !! Yes thats right no increase in 10years and any repair or problem sorted within 72 hours without any upfront costs or claim back the money from her. …she never bothers me …i have seen her 3 times in 10yrs but she is always there on end of the fone any time ……i want to move but so reluctant when i hear others landlord horror stories

    • Desmojonic

      Hi Bazza,
      I had a property I could not sell during the downturn, that made me an unwilling landlord. I had to buy as a ‘first time buyer’ without all the assistance they rightly get. Thankfully I could raise a modest release on my old property along with my wife’s savings to but our own modest property. I’m now stuck in a house smaller than that which is normally enjoy, after years of working hard I might add. I’m forced to spread my load across two properties one being afforded through rent to pay a BTL mortgage and doubling my risk across two houses as well as a tenant who so take full responsibility for (as last Wed when she called to tell me the ceiling had sprung a leak at 06h23!) I looked after her! I’ll continue to do so.
      May I suggest you get your facts straight before making sweeping generalisations about people in this country. People live on what they can, most aren’t rich, most ate like you and I. Some have 2 or more properties, some through choice, others not. If you have a personal opinion based on that which you have seen; fine. Stick to those facts my friend. Not all landlords are callous and cruel. I certainly ain’t. You ever find yourself on the skids, give me a call I’d be happy to look after you too if so can.

    • Murray Snudge

      Hey Bazza, there are more bad tenants than bad landlords – that’s a fact!

    • speedgeek

      My grandfather bought a number of properties after the War as an investment. For a large part of the decades he rented out, he was subject to the Fair Rents Act, which capped the amount he was able to charge in rent. Despite this, he maintained the houses, treated his tenants well and immediately addressed any problems, contacting his contractors within the hour to carry out any repairs.
      There was genuine sadness among his tenants when he had to sell up, because of age and declining health, but, as he had anticipated, he made a very healthy profit.

      Not all landlords are greedy fat cats.

  • Rog

    I live in the North-west of England where property is considerably cheaper than in London. I wouldn’t live anywhere near London if you paid me. Why should my taxes subsidise the purchase of expensive property in London?

  • Hammy

    I have been a landlord in the past (with very mixed results), and I have no problem with other people buying to let. I have to laugh at rather ridiculous comments from people like Bazza. OF COURSE landlords are doing it for a profit – exactly the same as EVERY other business (including charities). The sole reason companies are formed is to make a profit – indeed it is their primary DUTY (in law) to act in the financial interests of their share-holders. If Bazza worked and not made a profit by doing so he wouldn’t have lasted very long in business would he? Just what are people like him smoking I wonder – obviously some very good “stuff”! Get real people.

  • philip allen

    Hi Bazza,
    I’m a landlord running a business. I run my business to make a profit, just like millions of people around the world, including yourself running your building business. If you don’t make a profit as a builder I suggest you try another trade. Don’t be afraid of making a profit if you offer a good service.