The Chancellor made little mention of housing in today’s Budget, and there were only a few references to residential property in the Budget Report and related documents which are released as soon as Philip Hammond sits down after his speech.
The only direct mention of stamp duty was connected with a delay in the timing of payments – not a major alteration in actual rates as many had been hoping for.
The Budget laid out plans to push back the date when stamp duty will have to be paid within 14 days of a house purchase, down from the current time period of 30 days. The measure was due to come into force in 2017/18, but will not now be introduced until 2018/19.
This change will cost the Exchequer £105 million in 2017/18, but garner an extra £95 million in 2018/19.
The Budget Report also includes all the Office for Budget Responsibility’s latest forecasts for the housing market. It is more upbeat in terms of house prices this year, see below.
It also sees a continued rise in transactions (as shown below) – although they will not climb back to pre-crisis levels by 2021.
Additionally, the OBR is also very bullish about the potential income from stamp duty, as shown below, seeing it rise to £13 billion over the next four years.
Other key announcements included:
- The Office for Budget Responsibility revised upwards its GDP growth forecast for the fiscal year 2017/2018 to 2.0%, but cut the figures for 2018/2019 to 1.6%, and for 2019/2020 to 1.7%.
- Public sector borrowing per annum is set to fall from 3.8% of GDP in 2016/2017 to 2.6% in 2017/2018. The national debt is forecast to decline from 86.6% of GDP today to 79.8% in five years’ time.
- £435 million was promised to help firms facing increases in business rates. This consists of a £300 million hardship fund, a £50 a month cap on the increase for firms coming out of business rates relief, and a £1,000 discount in 2017/2018 for pubs valued at under £100,000.
- The Chancellor promised to look at reform of the business rates system, probably with more frequent revaluations.
- Class 4 National Insurance contributions are to rise from 9.0% to 10% in April 2018 on profits between £8,060 and £43,000, and 11% in April 2019. The tax free dividend allowance for directors and investors in small firms will be cut from £5,000 to £2,000.
- There were no additional changes for income tax, corporation tax, VAT, or duty on alcohol and tobacco. Any future changes in the pipeline (like plans to cut corporation tax to 17% by 2020) date back to previous budgets.
- In order to boost science and technology in the UK, £300 million was pledged to support PhD students in relevant disciplines, and £270 million for research and development in disruptive technologies, like bio-tech and driverless cars.
James Roberts, Knight Frank Chief Economist, comments: "Predictably, the Chancellor was only able to offer an aspirin to ease the pain of firms facing higher business rates, given the state of the Government’s finances. It was a typical Budget, where giving with one hand was matched by taking with the other. So the science and tech sectors were promised more funding for R&D, while simultaneously hit by tax increases for entrepreneurs, courtesy of higher National Insurance for the self-employed. Overall, it was not a Budget to get excited over, and I suspect the Chancellor is holding money back to give the economy a boost in his autumn 2018 Budget - just before the UK exits the EU."