Mortgage Introducer

March 16, 2016

Alanzo Seville, mortgage adviser at Capricorn Financial Consultancy, runs through the Budget from a mortgage adviser’s view.

After recent sweeping changes to stamp duty rates, the tax treatment of buy-to-let properties and the imminent changes to the stamp duty for second homes and buy-to-let properties today’s Budget did not contain too many surprises for the housing and mortgage market.

The introduction of the Lifetime ISA with effect from April 2017 is a measure aimed at a mixture of long-term saving and saving for a property.

It can be used in conjunction with the other recent addition to the ISA range, the Help to Buy ISA. There is a maximum purchase price that will apply for properties that are purchased using the Lifetime ISA which is £450,000.

ISAs are one of the few financial products which seem to have caught the public’s attention, so this hybrid version should be warmly received by perspective home-owners. Even though the maximum yearly contribution is £4,000 with an annual government bonus of £1,000.

On the housebuilding front there was some minor tweaks to schemes which had been previously announced, by bringing forward of 13,000 new affordable houses and promising to deliver 30,000 starter homes on previous brownfield land.

This does not go far enough to solve the housing affordability issue, especially for would be purchasers in the South East.

A side-line about reviewing the “housing transaction process” sounds intriguing. We all know that failed transactions waste money and money so any sensible changes to this process should be welcomed.

A change in the planning system could prompt local authorities to increase the speed at which new sites are approved but that is only part of the problem and needs to translate into sites being started (and finished on time) to deal with the current shortfall in required new homes.

Confirmation that anyone purchasing a new residential property whilst owning their current property will now have a 36 month window before the higher rates of stamp duty are applied is a step in the right direction.

Speaking of stamp duty it seems that the Chancellor could not resist changing the stamp duty rates again but this time his attention was focused on the commercial property sector.

The new stepped rates should help smaller business to purchase property as the amount of stamp duty due will either be frozen or reduced.

A tax break of £1,000 for property income looks to be more of a gimmick and it is doubtful if it will encourage people to rent out their rooms whilst they are on holiday.

The reduction in capital gains tax will be welcomed in some quarters but residential property will be exempt from the reduction, so no giveaway there.

The restructure of the Money Advice Service is a backward step. MAS was certainly not a favourite of many advisers but any service which is aimed at increasing financial literacy has to be supported.

After all, there is only so much advisers can do.

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