Here are the key property and housing plans unveiled by the Chancellor George Osborne.
On mortgage relief for 'Buy to Let' investors
Buy-to-let tax breaks are to be cut. Investors will only be able to claim the basic rate of tax - 20% rather than 45%. The relief is estimated to cost £6.3bn a year. Experts warn landlords may hike rents for tenants to compensate though the move could be good for first-time buyers in a property market with limited supply. The change will be introduced over four years from April 2017.
Mr Osborne said the current system gave buy-to-let landlords "a huge advantage in the market", compared with homebuyers. It means landlords could be up to £2,000 worse off each year, based on typical rents, experts have warned.
This certainly helps to level the playing field for first time buyers. The fact the change was being introduced slowly would soften the blow for investors.
On 'Help to Buy' ISAs
The Help to Buy equity scheme - which is designed to help people with small deposits get on the property ladder - has already been extended from 2016 to 2020. The second part of the scheme, the mortgage guarantee, is due to finish at the end of next year.
We now have a firm date for the launch of Help to Buy ISAs, which will be available to first-time buyers from 1 December 2015 at participating banks and building societies. Aspiring homeowners can save up for a deposit and receive a £50 bonus for every £200 saved, with a maximum government bonus of £3,000 on £12,000 of savings.
Savers will be able to open their Help to Buy ISA with a one-off deposit of £1,000 to kick things off and then £200 per month thereafter.
On Inheritance Tax threshold
Mr Osborne has raised the Inheritance Tax threshold to £500,000 for individuals and £1 million for married couples by introducing a “family home allowance”.
This means that married couples will now be able to bequeath assets, including property, up to the value of £1 million completely tax free. Crucially for the property market, Osborne has also announced plans to introduce an ‘Inheritance Tax credit’ which means that people will be able to downsize to a smaller property without missing out on this new incentive.
“The idea is that larger properties will come back onto the market and increase buyer and seller demand.
On ‘Support for Mortgage’ Interest changes
Support for mortgage interest payments will become a loan instead of a benefit, the Chancellor has announced. The long-term consequences of this change are unclear. 183,000 people currently benefit from this scheme.
Currently, homeowners receiving certain income-related benefits can be paid a benefit to cover the interest payments on their mortgage, which is paid direct to the lender. The benefit is available on mortgages of up to £200,000. On 6 July, the standard interest rate used was reduced from 3.63 per cent to 3.12 per cent.
On ‘Rent a Room’ relief
The current rent-a-room relief (£4,250) for people who rent a room in their home, which has not been changed in the past 18 years, will be raised to £7,500 from next year. This is the amount of money homeowners can earn in rent from lodgers before tax.
The budget document has also revealed the current system that allows those to claim 10 per cent of their rent for wear and tear will be scrapped. From next April, landlords will only be able to deduct costs they actually incur.
On ‘Right to Buy’ scheme
Chancellor Osborne also confirmed the extension of the Right to Buy scheme to housing association tenants and said there will be another announcement related to housing policy this Friday. The announcement will address the issue of planning reforms.
Here are the highlights from George Osborne's 2015 budget speech:
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