What could the 2018 Budget mean for homeowners?

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What could the 2018 Budget mean for homeowners?

26 October 2018

The chancellor will outline the government's plans for tax and spending for the new financial year this Monday – so what could this mean for homeowners? It's predicted that buy-to-let landlords may be the most affected by this Autumn's Budget, with possible changes to stamp duty, tenancy agreements and capital gains tax. It's hoped that whatever's suggested will help to stimulate the housing market, rather than hinder it.

Related: How might the latest interest rate rise affect me?

Tax breaks for longer tenancies

In the summer, Communities and Local Government Secretary James Brokenshire proposed a minimum three-year contract for tenants. This would make it harder for landlords to remove tenants before the end of this period, however, tenants would still be able to leave early, subject to notice. It's no secret that more young families now live in rented accommodation – after all, with house prices rising in most UK areas, it's become increasingly harder to buy. This new initiative was proposed in a bid to improve housing security for tenants, however, it was received with mixed reviews. To cushion the blow, the Budget could include a tax break for landlords who let their property for a minimum 3-year term, encouraging this to become the norm ahead of any formal change in legislation.

Capital gains tax break for sitting tenants

Currently, landlords pay up to 28% on profits for capital gains tax when their property is sold. However, in the new Budget, landlords and tenants could potentially receive a capital gains tax break when a property is sold to a sitting tenant of at least three years. The think tank Onward, who has petitioned for the tax break, suggest that this would help nearly 500,000 households over five years, with an average capital gain of £15,000 per property.

Changes in stamp duty?

Last year, Phillip Hammond cut stamp duty for first-time buyers leading some to speculate that more changes lie ahead. In her recent speech to the Conservative party conference, Theresa May suggested that foreign buyers could face a surcharge of up to 3% on top of stamp duty. This move has been criticised by some who suggest that foreign investors aren't responsible for driving up house prices. For UK buyers, it's hoped that Phillip Hammond will relax any stamp duty increases for buy-to-let investors. This group was particularly hit by the stamp duty increases in recent budgets. Stamp duty relief for retirees looking to downsize would also be welcomed since this would potentially create more suitable housing options for families.

Changes to the planning system

Currently only 2-10% of the UK is deemed suitable for building on, leading to a shortage of viable sites. If the planning regulations were relaxed, more houses could be built which would help to stimulate the housing market. Some experts have suggested that this would be instrumental in helping first-time buyers get on the property ladder. Since this is a very real concern for the government, this year's Budget may be used as a platform to stimulate the growth in new builds, giving buyers better access to affordable housing.

For more information about how to get on the property ladder, get in touch.