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How could the Chancellor’s Spring Budget help mortgage holders?

5th Mar 24 8:26 am

With a general election looming and a tough macroeconomic climate, it’s crunch time for the Chancellor as he prepares to deliver the Spring Budget.

With the housing market in the spotlight, the experts at property finance specialists Anderson Harris share what their clients are calling for from the Spring Budget and how it could impact the property market.

Cut stamp duty

A stamp duty cut for all buyers, from first timers to downsizers, could be a game-changer for getting the housing ladder moving. Cutting stamp duty at every stage of the chain could release those “next time buyers” who currently feel trapped by the costs of upsizing and are adding to the market’s sluggishness.

Increase the Lifetime ISA property price limitation

Many would-be homeowners use a Lifetime Individual Savings Account (LISA) to build up their deposit. Savers can pay in up to £4,000 per year to earn a 25% government bonus, as well as annual interest. The LISA can then be used towards the purchase of a property costing £450,000 or less.

However, the average London property price is now £729,802 and the average in the South East is £480,955 according to Rightmove, meaning the £450,000 price cap needs urgent review.

The cap has been frozen since 2017, while property prices have risen by 30%. Raising the £450,000 price limitation would stop those buying their first home from being penalised as a result of the market’s movement over the past few years.

Address fiscal drag

The past few years haven’t been easy on anyone in financial terms. The Chancellor has the opportunity to help address this by tackling fiscal drag. He could do this in a multitude of ways.

Personal tax bands, for example, haven’t increased in line with inflation and are currently frozen until 2027/2028. This has pushed 1.6 million more people into higher tax bands at a time when the cost of living has been soaring. For those earning over £100,000 per annum, this has meant a loss of their personal allowance and the withdrawal of 30 hours of free childcare provision.

These kinds of matters impact everything from how much disposable income people have to mortgage affordability. Fiscal drag has become a stealth tax that simply must be addressed.

Adrian Anderson of Anderson Harris said, “We are experiencing strong demand from clients at all stages of the homebuying journey right now, from first-time buyers all the way through to downsizers. Ultimately, the UK needs to build more homes, faster.

“These homes need to suit a range of needs and stop supply constraints from pushing prices ever upward. That’s what homebuyers want and need.”

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