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UK to extend scheme to assist first-time property buyers until 2023

Measures reflect the government's determination to increase home ownership for younger voters

An independent review of the Help to Buy policy concludes that the programme has supported the development of more homes.


THE UK government gave its clearest signal yet that first-time buyers are its housing priority while landlords remain in the cross-hairs.

Contrary to fevered speculation that the generous Help to Buy policy might meet its demise - originally sparked by a review into the programme - the government will actually extend its interest-free loans to 2023, with some tweaks that focus the policy more specifically on debut home buyers.

Currently, those taking advantage of the programme, which is due to end in March 2021, can buy a property worth up to £600,000 (S$1 million) in England and benefit from a maximum 40 per cent government loan in London and up to 20 per cent in the rest of the country.

From April 2021, a two-year scheme will be introduced, which will have regional caps on the value of the property which can be bought, all of which will be lower than the current £600,000 rate, except in London, the government said on Monday.

Rental investors, meanwhile, were hit with the removal of lettings relief, a break that reduces capital gains tax for homes that have at some point been rented out.

Only properties where the owner remains in occupancy and rents out a room will be exempt.

The measures reflect the Conservative government's determination to increase home ownership for younger voters, a goal that has been out of reach in part because of price inflation caused by wealthy pensioners investing in rental property.

While home builder shares might rise on the extension of the Help to Buy equity loan scheme, which was revealed in the Budget documents after markets closed on Monday, the government's moves were muted compared with the sweeping changes that they have introduced in recent years.

Other key measures included:

  • A package of policies designed to support town and city-centre stores, including the potential relaxation of rules to make it easier to convert vacant units into homes;
  • More funding for housing infrastructure and bank guarantees to support small builders;
  • Scrapping stamp duty for shared ownership homes worth up to £500,000;
  • Cutting property taxes for some businesses with lower-value stores.

The government will publish a consultation in January 2019 on a stamp duty surcharge of one per cent for non-residents buying homes in England and Northern Ireland.

Alongside the main budget document, the government also published the independent review of Help to Buy, which concluded that the programme has supported the development of more homes.

It also published a review into so-called land banking that found large house builders were not guilty of hoarding plots and slowing development in order to boost prices. BLOOMBERG

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