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.
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.
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.