Q. How much difference will the recent Budget make to the housing market?
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In practice, of course, it’s much too soon to tell, but in the immortal words of the late great Eric Morecambe, I think the short answer is probably “Not a lot!”
Much was understandably made by the Government of their new £250million FirstBuy shared equity scheme, designed to help hard-pressed first time buyers get onto the property ladder. However, since it only applies to new-build properties, it will do nothing at all to help boost sales of “second hand” or resale homes. Besides, it is calculated that it will probably only help a maximum of 10,000 first time buyers, before the funds run out - which is little more than a drop in the ocean.
Of course, new build can still represent an exciting opportunity - but only at the right price. So, my advice to all buyers – be they first-timers or not - is to do your homework thoroughly before making an offer and look at the second hand equivalent house to give you some evidence. Nevertheless, you should still expect the new one to be a little dearer, because like a car you will have to pay a “new premium” – often around 5%.
As for other Budget measures…the decision to keep Stamp Duty at zero for first time buyers on properties up to £250,000 for a further year is to be welcomed - although any feelgood factor generated by this will to an extent be offset at the other end of the scale by the new 5% rate on properties over £1million.
In summary then, plenty of people will argue that the Chancellor could have done a lot more to support the property market. And in theory, he could have done – for example, by embarking on a long-overdue revision of the entire Stamp Duty system. Whether he ought to have done, however, is a very different question - after all, the housing market doesn’t exist in a vacuum. In fact, all in all, given the wider economic realities, I suspect he did as much as he prudently could. Which, as I said at the start, was not a lot!