Although the budget's focus was more on tax as you might expect for a pre-election budget, it did hold some relevant points for the property market. We have broken down the key points for you below.
Help to Buy ISA
This was a welcome announcement to first time buyers across the country particularly for those in London, where getting on the property ladder can sometimes feel like an insurmountable feat.
Features of this new scheme include:
• For every £200 saved, the government will top it up by £50
• So if you save £12,000 the government will then turn it into £15,000, provided it is only used as a deposit for your first home
The government hopes that this new measure will enable more first time buyers to join the property ladder and further stimulate the entire market.
Pension Freedom Scheme
The Chancellor has also revealed the possibility of extending pension freedoms to allow existing retirees to `cash in' their retirement fund.
The Pension Freedom Scheme comes into effect as of the 6th April, allowing newly retired citizens to draw their pension out in its entirety and re-invest elsewhere.
One example could be to buy an investment property, providing them with:
• An income, potentially higher than that of an annuity
• An asset to be bequeathed to loved ones
Consequently, there could be an influx of cash rich investors coming into the market competing for prime one and two bedroom properties, adding to the already high demand in the London property market. This will also bring a fresh supply of properties to the rental market.
It is however worth noting that only 25% remains tax free and anything above that is subject to income tax at the individual′s given rate.
Employment and Interest Rates
Last, but by no means least, the Chancellor has also stated that employment is at an all-time high and with interest rates being at a record low, meaning mortgages are currently much more affordable than rent, this creates an ideal climate for buyer confidence and movement within the market.
But what does this mean for you and your property plans in 2015?
There has always been a disparity between the supply and demand of London property; we are a low rise city with a high rise population, set to rise by two million over the next ten years.
The effect of this budget will be one of increased competition, resulting in more activity and no doubt a flurry of media attention; once again increasing the energy in the market. This is especially relevant if you are looking to trade up as the gap between your current property and onward purchase is only set to increase as prices rise.
Considering a move this year? Our advice is stay ahead of the curve and make a start now. Take advantage of this brief period of relevant normalisation in a market where the stock is steady and fantastic mortgage rates are readily available.
Are you ready to get moving or just curious about your property's current value? Contact one of our local experts for a free valuation.
