U.K. Turns the Screws on Landlords, Extends Help to Buy Plan
(Bloomberg) -- The U.K. 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 program -- the government will actually extend its interest-free loans beyond the next election to 2023, with some tweaks that focus the policy more specifically on debut home buyers. The budget document published Monday makes clear however that there’s no intention of extending it any further.
U.K. Review of ‘Help-to-Buy’ Shows Program Helped Boost Housing
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 Future of Help to Buy|
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 extension of Help to Buy -- revealed in the budget documents after markets closed yesterday -- may be positive for the industry, and for the Conservative party’s re-election prospects in 2022, moves were muted compared with the sweeping changes it has introduced in recent years.
The U.K.’s biggest home builders rose. Persimmon, the most reliant on Help to Buy, Taylor Wimpey Plc and Barratt Developments Plc were all up by at least 1.7 percent.
|Other key measures:|
Alongside the main budget document, the government also published the independent review of Help to Buy, which concluded the program has supported the development of more homes. It also published a review into so-called land banking that found large house builders weren’t guilty of hoarding plots and slowing development in order to boost prices.
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