Help for Generation Rent was at the top of the agenda of Philip Hammond's Budget.
First time buyers will no longer have to pay stamp duty on the first £300,000 purchase price on properties up to £500,000 in value. This change applies immediately throughout the UK, except Scotland which has devolved powers. It will be reviewed in 2020.
This measure was supported by LEBC as a fair way to redirect the extra 3% stamp duty imposed on second home owners and landlords in his earlier budget.
The saving made will enable those now renting, who want to buy, to do so sooner.
In recent years, according to research conducted by the Resolution Foundation, the average cost of rent has equated to 36% of net earnings. Yet current low interest rates mean that the average cost of buying is 12% of net earnings. (1)
High rents make it harder to save, so many would be home owners are trapped in a cycle it is hard to break out of. Once they do, they could see their cost of living fall, making it easier to save for other goals.
Other Budget announcements aimed at solving the affordable housing shortage included:
Added to this, the Lifetime ISA which offers a Government cash bonus of 25% of savings up to £4,000 per year to the under 40s, it would appear that the Government is listening to the housing concerns of the younger generation.
Many older members of the family are keen to help their offspring get on the housing ladder. There are many ways to do this, they include:-
Each of these options have pros and cons, some are riskier than others and will have different tax consequences. After planning their own retirement, it is one of the hottest topics of conversation amongst LEBC's clients. So we would expect yesterday’s announcements to be welcomed by many, not just the younger generation clearly in the Chancellor’s sights.
Director of Public Policy, LEBC
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