From 1st July the Council of Mortgage Lenders is integrated into a new trade association, UK Finance. For the time being, all UKF mortgage information will continue to be published on this website, and UKF member-only mortgage information will only be available here.

UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to www.ukfinance.org.uk for wider content and updates from UK Finance.

Last updated: 10 March 2017

Latest updates

08/03/17

The chancellor Philip Hammond gave the final spring Budget statement on 8 March 2017. Given that this follows hot on the heels of the housing white paper...

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23/11/16

The chancellor Philip Hammond presented the 2016 Autumn Statement  today. The key announcements included the introduction of tenure flexibility across the Affordable Homes Programme, by relaxing...

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16/03/16

The chancellor George Osborne announced his 2016 Budget. The key announcements included the government's response to its consultation on stamp duty for additional properties, the introduction...

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At a glance

  • The Budget is an annual statement made to the House of Commons by the chancellor of the Exchequer on the nation's finances and the government's proposals for changes to taxation. The Budget also includes forecasts for the economy by the Office for Budget Responsibility (OBR)
  • The 2017 spring Budget is the final Budget to be held during the springtime. The timing of the annual Budget statement will now be held in the Autumn (replacing the Autumn Statement).
  • Most of the tax changes announced in the Budget are legislated for in the annual Finance Bill. Unlike other legislation, tax legislation announced in the Budget may take effect before the Finance Bill is enacted.
  • These pages summarise the key measures of relevance to the mortgage lending industry announced in the most recent Budget. 

Latest updates

08/03/2017

The chancellor Philip Hammond gave the final spring Budget statement on 8 March 2017.

Given that this follows hot on the heels of the housing white paper published on 7 February, announcements of interest to the mortgage lending industry are few.

The main announcement was a forthcoming consultation on tax relief for the rent-a-room scheme and green paper on competition and consumer markets.

All relevant announcements can be found in the spring Budget 2017 tab on our Budget statements web page.

23/11/2016

The chancellor Philip Hammond presented the 2016 Autumn Statement today. The key announcements included the introduction of tenure flexibility across the Affordable Homes Programme, by relaxing restrictions on grant funding; and confirmation that the HM Land Registry will remain in the public sector.

The chancellor also announced that the government will move to a single major fiscal event each year. This means that following the spring 2017 Budget, future Budgets will be delivered in the autumn, with the first one taking place in autumn 2017.

All relevant announcements can be found in the Autumn Statement 2016 tab on our Budget statements web page.

16/03/2016

The chancellor George Osborne announced his 2016 Budget. The key announcements included the government's response to its consultation on stamp duty for additional properties, the introduction of a new Lifetime ISA which can be used to save for the long term or buy a home, and that it is proposing to replace the Money Advice Service, Pension Wise and The Pension Advisory Service with a slimmed down money guidance body.  

All relevant announcements can be found in the Budget 2016 tab on this page.

25/11/2015

The chancellor George Osborne announced the 2015 Spending Review and Autumn Statement on 25 November. The key announcements included a doubling of the housing budget; new Help to Buy: Shared Ownership and London Help to Buy schemes; and a higher rate of Stamp Duty on purchases of additional residential properties including buy-to-let properties.

All relevant announcements can be found in the 2015 Autumn Statement tab in this section.

08/07/2015

The chancellor George Osborne announced his 2015 Summer Budget on 8 July. The key announcements included reforming Support for Mortgage Interest (SMI) from a benefit to a loan; buy-to-let higher-rate cost relief restriction; rent-a-room relief – for people who rent out a room in their property the government will increase the level of income that can be received before tax has to be paid; inheritance tax on property – an additional nil-rate band when a residence is passed on death to a direct descendant; changes to housing benefit and social rents; and a start date for saving into a Help to Buy ISA.

All relevant announcements can be found in the Summer Budget 2015 tab in this section.

18/03/2015

The chancellor George Osborne announced his 2015 Budget on 18 March. The key announcements included an update on our mortgage fees and charges transparency project with Which?, and a new Help to Buy ISA. All relevant announcements can be found on the Budget 2015 tab on this page.

Spring Budget 2017

The chancellor Philip Hammond announced the 2017 spring Budget on 8 March. This is the final Budget statement to take place in the springtime. Instead future Budgets will take place in the autumn, replacing the Autumn Statement.

The chancellor's statement, full Budget report and accompanying documents can be found on the Treasury's website.

However, given that the housing white paper was published on 7 February, there are very few announcements relevant to our industry.

Economic and fiscal backdrop

The chancellor delivered the first of his two Budgets this year, and continued with his aim of balancing the books as early as possible in the next parliament. His aim for this parliament is to get the structural deficit to less than 2% of GDP and for debt to be falling as a proportion of GDP.

Borrowing in 2016-17 is expected to be £16.4bn lower than forecast back in the autumn, partly because of one-off factors and timing effects. But the profile of borrowing from 2017-18 to 2021-22 is little changed from the forecasts back in autumn.

Net borrowing is expected to be £51.7bn in 2016-17, rising to £58.3bn next year, before falling each year to reach £16.8bn in 2021-22. This means borrowing will be £7.6bn less over the five year period to 2021-22.

GDP growth has been revised up for this year, now expected to be 2.0%. Growth for next year has been revised down slightly, to 1.6%, with the economy then expected to grow slightly more quickly in each consecutive year to get back up to 2.0% growth by 2021.

Property taxation 

Rent-a-room relief – The government will consult on proposals to redesign rent-a-room relief, to ensure it is better targeted to support longer-term lettings. This will align the relief more closely with its intended purpose, to increase supply of affordable long-term lodgings.

Competition and consumer markets

Consumers and markets green paper – The government will shortly bring forward a
green paper to examine markets that are not working efficiently or fairly. The government will:

  • legislate at the earliest opportunity to allow consumer enforcement bodies, such as the Competition and Markets Authority, to ask the courts to order civil fines against companies that break consumer law. This will be a strong and effective deterrent, and will enable consumer bodies to take tough action against firms that mislead or mistreat consumers
  • consider how to make terms and conditions clearer, simpler and shorter for consumers to engage with, building on the call for evidence on terms and conditions last year

The government's work in this area may well build on the original intentions behind the Better Markets Bill which was announced in the 2016 Queen's speech and has yet to materialise.

This bill, proposed by the old Department for Business, Innovation and Skills, was described as a means of improving competitiveness and opening up markets so as to empower consumers. With a particular focus on energy prices, it included proposed measures on switching periods (including for mortgages) and consumer redress in regulated sectors.

Savings

NS&I Investment Bond final rate – The Budget confirms the rate on the NS&I Investment Bond announced at Autumn Statement 2016. The Investment Bond will offer a market-leading rate of 2.2% over a term of 3 years and will be available for 12 months from April 2017. The Bond will be open to everyone aged 16 and over, subject to a minimum investment limit of £100 and a maximum investment limit of £3,000. At £3,000 the investment limit is enough to cover all the savings of over half of UK households.5 This will support savers who have been affected by low interest rates.

Asset sales

Lloyds – The government launched a trading plan on 7 October 2016 to sell its shares in Lloyds Banking Group.Sales already exceed its previous 2016-17 projection by £1.0 billion and remain on track to fully return Lloyds to the private sector by the end of 2017-18. When taken alongside previous share sales and dividends received the government has recovered over £19.0 billion for the taxpayer and is on track to recover all of the £20.3 billion injected in to the bank.

RBS – The government will continue to seek opportunities for disposals, but the need to resolve legacy issues makes it uncertain as to when these will occur.

UK Asset Resolution (UKAR) – UKAR’s balance sheet has already reduced from
£115.8 billion in 2010 to £36.9 billion as at 30 September 2016 and its £15.65 billion
programme of sales of Bradford & Bingley (B&B) mortgage assets continues to progress to plan with full conclusion expected before the end of 2017-18.

Autumn Statement 2016

The main new policy announcements within the Autumn Statement of interest to the mortgage industry include, introducing tenure flexibility across the Affordable Homes Programme by relaxing restrictions on grant funding; and confirmation that the HM Land Registry will remain in the public sector.

The chancellor also announced that the government will move to a single major fiscal event each year. This means following the spring 2017 Budget, future Budgets will be delivered in the autumn, with the first one taking place in autumn 2017.

Economic and fiscal backdrop

The theme of fiscal retrenchment featured less, as the chancellor pushed out the aim of balancing the books into the next parliament as he delivered his first (and last) Autumn Statement. Net borrowing is now forecast to fall more slowly over the forecast period, from £68.2bn in 2016-17, to £20.7bn in 2020-21. This means borrowing will be £27.7bn higher in 2020-21, than was expected at the time of the Budget this year and £110.2bn higher over the five year period.

GDP growth was revised up slightly for 2016 to 2.1%, but revised down for 2017 and 2018, with growth expected to be 1.4% and 1.7%, respectively. The economy is then expected to grow at 2.1% in 2019 and 2020, before settling at 2.0% in 2021.

Housing supply

The government will publish a Housing White Paper shortly, setting out a package of reform to increase housing supply and halt the decline in housing affordability. To help deliver this, the Autumn Statement announces:

  • Housing Infrastructure Fund – a new Housing Infrastructure Fund of £2.3 billion by 2020-21, funded by a new National Productivity Investment Fund (NPIF) and allocated to local government on a competitive basis, will provide infrastructure targeted at unlocking new private house building in the areas where housing need is greatest. This will deliver up to 100,000 new homes. The government will also examine options to ensure that other government transport funding better supports housing growth.
  • Affordable homes – the government will relax restrictions on grant funding to allow providers to deliver a mix of homes for affordable rent and low cost ownership, introducing tenure flexibility across the Affordable Homes Programme to meet the housing needs of people in different circumstances and at different stages of their lives. The NPIF will provide an additional £1.4 billion to deliver an additional 40,000 housing starts by 2020-2.

Accelerated construction - In early October, the government announced that it would pilot accelerated construction on public sector land, backed by up to £2 billion of funding. To meet this commitment, the government will invest £1.7 billion by 2020-21 through the NPIF to speed up house building on public sector land in England through partnerships with private sector developers. The devolved administrations will receive funding through the Barnett formula in the usual way.

Greater London Authority (GLA) affordable housing settlement - the government confirmed the GLA affordable housing settlement, under which the GLA will receive £3.15 billion to deliver over 90,000 housing starts by 2020-21.

Right to Buy

The government will fund a large-scale regional pilot of the Right to Buy for housing association tenants. Over 3,000 tenants will be able to buy their own home with Right to Buy discounts under the pilot.

Social housing

Local Housing Allowance (LHA) rates in social housing – the implementation of the cap on Housing Benefit and LHA rates in the social rented sector will be delayed by one year, to April 2019. The cap will be applied to all supported housing tenancies from April 2019, and the government will provide additional funding to local authorities, so that they can meet the additional costs of supported housing in their area. For general needs housing, the cap will now apply from April 2019 for all tenants on Universal Credit, and to Housing Benefit tenants whose tenancies began or were renewed since April 2016.

Pay to Stay – As announced by DCLG on 21 November 2016, the government has decided not to implement Pay to Stay, under which local authority tenants with taxable incomes over £31,000 (or £40,000 in London) would have been required to pay a market, or near market, rent. The government will work to deliver its commitment to ensure that social housing is occupied by those who need it most through other measures.

Letting agents fees

The government will ban letting agents’ fees to tenants, to improve competition in the private rental market and give renters greater clarity and control over what they will pay. The DCLG will consult ahead of bringing forward legislation.

HM Land Registry

Following consultation the government has decided that HM Land Registry should focus on becoming a more digital data-driven registration business, and to do this will remain in the public sector. Modernisation will maximise the value of HM Land Registry to the economy, and should be completed without a need for significant Exchequer investment.

NS&I Investment Bond

To provide support to savers NS&I will offer a new market leading 3-year savings bond. The indicative rate is 2.2% but this may be adjusted to reflect market conditions when the product is launched. The bond will be open to those aged 16 and over, subject to a minimum investment limit of £100 and a maximum investment limit of £3,000. The product will be available for 12 months from spring 2017.

Further information

The full Autumn Statement report is available on the Treasury's website. Please contact us if you wish to follow up on the CML's work on the issues.

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Spending Review and Autumn Statement 2015

The 2015 Spending Review and Autumn Statement contains several key announcements for the mortgage industry. We issued a press release commenting on three in particular - the delivery of mortgage finance to support new supply in the form of Starter Homes and the newly announced Help to Buy: shared ownership homes; the introduction of additional stamp duty on buy-to-let transactions; and the work we have been undertaking with Which? on the transparency of mortgage fees and charges.

Economic backdrop and housing market assumptions

Modest upwards revisions see annual economic growth averaging close to 2.4% and ongoing fiscal improvement over the next five years.

The OBR forecasts house prices growing by 6.2% in 2015, and averaging a little below 5% per annum over the next five years.  While the near-term outlook for property transactions is a little stronger than expected back in July, the medium-picture is weaker in part reflecting government plans to introduce higher rates of stamp duty land tax on purchases of buy-to-let and second homes from April 2016.

After touching post-crisis lows of about 142%, household debt as a proportion of income has stabilised at about 145% in recent quarters.  The OBR projects this ratio growing progressively to more than 160% over the next six years.  Only about half of this growth relates to mortgages, the rest is unsecured.  As a result, household net wealth remains little changed at about 8 times income throughout the period.

Housing supply

The chancellor announced that the budget for housing will be doubled from 2018-19 and set out a five point plan for housing, including delivery of 400,000 affordable housing starts by 2020-21 focused on low cost home ownership.

Taken together the capital programme, loan schemes, Help to Buy and other measures amount to over £20 billion investment in housing over the Spending Review period.

Given the scale of this programme of housing building, government expect all sectors to play a role in delivery. As a result, the government will remove constraints that prevent private sector organisations from participating in the delivery of these initiatives, including constraints on bidding for government funding.

Starter Homes

200,000 Starter Homes will be sold at a 20% discount compared to market value to first-time buyers under the age of 40, with a £2.3 billion fund to support the delivery of up to 60,000  of these, in addition to those delivered through reform of the planning system.

Help to Buy

The Help to Buy: equity loan scheme will be extended to 2021. In addition, two new Help to Buy schemes have been announced:

  • A new Help to Buy: shared ownership scheme which will aim to deliver 135,000 homes. The scheme will be open to all households earning less than £80,000 outside London and £90,000 in London; and
  • A new London Help to Buy scheme will offer a 40% equity loan in recognition of the higher housing costs in the capital. The scheme will offer buyers with a 5% deposit a loan of up to 40% of the value of a new build home, interest-free for 5 years. This scheme will be able to be used in conjunction with the new Help to Buy: ISA launching on 1 December 2015.

Right to Buy for housing association tenants

The government intends to press ahead with its manifesto commitment to extend the Right to Buy to housing association tenants. A pilot of the Right to Buy will be launched with five housing associations to help inform the delivery of the final scheme.

Buy to Let

From 1 April 2016 higher rates of Stamp Duty Land Tax will be charged on purchases of additional residential properties (above £40,000), such as buy-to-let properties and second homes. The higher rates will be 3% above the current Stamp Duty rates. The tax receipts from this measure will be used towards the increase in the affordable housing budget mentioned above. The government will consult on the detail of this policy.

CML/Which? mortgage transparency project

The Spending Review document acknowledges the work the CML has undertaken in conjunction with Which? to improve the transparency of mortgage fees and charges. It welcomes the recommendations contained in our joint report and comments that this is "significant step by the [mortgage] industry...in committing to several important actions including to standardise the presentation and definition of mortgage fees". 

Housing Benefit

The government will cap the amount of rent that housing benefit will cover in the social sector to the relevant Local Housing Allowance, which is the rate paid to private renters on Housing Benefit. The cap will apply from 1 April 2018, but only to tenancies signed after 1 April 2016.

Flood Reinsurance Scheme

The regulations setting out the arrangements for the implementation of the Flood Reinsurance scheme have been published in their final form. Subject to the scheme's approval by the Prudential Regulation Authority, the scheme will be introduced in April 2016.

Need more information

The full Spending Review and Autumn Statement report is available on the Treasury's website. Please contact us if  you wish to follow up on the CML's work on the issues.

Budget 2015

The chancellor George Osborne announced his 2015 Budget on 18 March. The chancellor's statement, full Budget report and accompanying documents can be found on the Treasury's website.

The key announcements taken from the 'red book' are listed below. 

Financial services

CML/Which? mortgage fees and charges transparency project 

As announced at Autumn Statement 2014, we published an interim report on mortgage lenders’ plans to standardise and improve the transparency of their fees and charges. This will increase comparability, empower consumers and make it easier for borrowers to choose the best mortgage deals. We will publish firm conclusions in July 2015, and the government expects the majority of the industry to have made the necessary changes by the end of the year.

Application Programming Interfaces (APIs) in banking

The government confirmed its commitment to deliver an open API standard in UK banking and, working with the banking and FinTech industries, set out a detailed framework for its design by the end of 2015. This will enable FinTech firms to make use of bank data on behalf of customers in a variety of helpful and creative ways, and ensure the UK remains at the forefront of developments in financial technology and innovation.

Savings and pensions

Help to Buy: ISA 

The scheme will provide a government bonus to each person who has saved into a Help to Buy: ISA at the point they use their savings to purchase their first home. For every £200 a first time buyer saves, the government will provide a £50 bonus up to a maximum of £3,000 on £12,000 of savings. Further details are provided in the document “Help to Buy: ISA” which is published alongside the Budget.

Annuities 

The government will legislate from April 2016 to allow people who are already receiving income from an annuity to agree with their annuity provider to assign their annuity income to a third party in exchange for a lump sum or an alternative retirement product.

Housing

Housing Zones 

The government is announcing the first 20 Housing Zones outside London with the potential to deliver 34,000 homes and will continue to work with 8 other potential Housing Zones. In total these have potential to deliver up to 45,000 new homes.

Barking Riverside 

The government continues to work with the Greater London Authority, London Borough of Barking and Dagenham and developers to unlock Barking Riverside, to support the construction of up to 11,000 homes. Transport for London will shortly launch the next public consultation on the proposed route of the railway extension.

Northstowe 

The government intends to create a joint venture with a private sector partner to lead development on the Northstowe site. The government expects that three quarters of the homes started on the public-sector owned site by 2020 will be built under direct contract with the public sector, with the rest in that period delivered through serviced plots in line with the public sector’s master-plan.

Ebbsfleet 

The government will shortly consult on a specification to deliver a masterplan at Ebbsfleet, and has asked the Ebbsfleet Urban Development Corporation to work with the government by the Spending Review on a prioritised list of infrastructure needs for Ebbsfleet.

Bicester 

The government supports Bicester’s ambitions to become a garden town, and will make capacity funding available to support its proposals. The government will also work with Bicester on helping to meet its infrastructure needs, including through the potential for recoverable government investment, subject to a business case. The government will provide capacity funding to Basingstoke and North Northants to support their proposals for development on garden town principles.

Public sector land housing target 

The government has already sold enough surplus public sector land to build over 100,000 new homes. The government is committed to releasing land with capacity for up to 150,000 homes between 2015 and 2020. The government will look to set departmental contributions by the Spending Round.

Housing Finance Institute 

The government will work with Keith House and Natalie Elphicke to implement a Housing Finance Institute, as recommended by their review, of the role of local authorities in housing supply, in conjunction with the Local Government Association and businesses.

Shared ownership 

Following an earlier consultation, the Homes and Communities Agency will amend guidance and model leases to help streamline the sales process for shared ownership properties in outright ownership. The government will also launch a wider review into shared ownership.

London

London Land Commission 

The government announced in the London Long Term Economic Plan (LTEP) that it would launch a London Land Commission (LLC) tasked with producing: the most comprehensive database of public sector land in the country; and mapping of brownfield land in London. The government is going further, with £1 million RDEL funding to allow it to carry out these functions; and is agreeing the terms of reference between the Greater London Authority and the government on the LLC.

Devolution of planning powers 

The government will consult on devolving planning powers over sightlines and wharves to the Mayor of London, allowing the Mayor to accelerate provision of new homes by reducing planning delays.

Property tax

Stamp Duty Land Tax: treatment of shared ownership properties 

As announced at Autumn Statement 2014, the government will extend the Stamp Duty Land Tax (SDLT) multiple dwellings relief to include superior interests in residential property, such as shared ownership. This will apply where the transaction is part of a lease and leaseback arrangement, if acquired from a qualifying body such as a housing association. The change will take effect from the date on which Finance Bill 2015 receives Royal Assent.

Tax simplification

Making tax easier: the end of the tax return 

The government will transform the tax system over the next Parliament by introducing digital tax accounts to remove the need for individuals and small businesses to do annual tax returns. Further details on the policy and administrative changes needed to deliver this will be published later in 2015.

Making tax easier: new payments process 

The government will consult over the summer on a new payment process to enable tax and NICs to be collected through digital accounts, instead of self assessment.

Markets and regulation

‘RegTech’ 

The Financial Conduct Authority (FCA), working with the Prudential Regulation Authority (PRA), will also identify ways to support the adoption of new technologies to facilitate the delivery of regulatory requirements. The FCA, working with the PRA, will report back to the Treasury later in 2015.

FinTech ‘sandbox’ 

The FCA will work with HMT and the PRA to investigate the feasibility of developing a regulatory ‘sandbox’ for financial services innovators, and will report back in autumn 2015 on how this could work in practice, with a view to launching the sandbox by the end of 2015 with an expected duration of around 5 years.

Competition and Markets Authority (CMA) recommendations for the
residential property management services market 

The government will take forward the CMA recommendations, and other actions agreed with the CMA, to improve the residential property management services market.

Asset sales

Nationalised bank asset sales 

UK Asset Resolution (UKAR) is launching a major sale of £13 billion of assets held from the nationalisation of Northern Rock and Bradford & Bingley. Any sale will be subject to ensuring value for money for the taxpayer.

Lloyds Banking Group share sales 

The government intends to sell £9 billion of its holdings in Lloyds Banking Group over the next 12 months, subject to value for money and market conditions.

Summer Budget 2015

The Summer Budget 2015 contains several key announcements for the mortgage industry. We issued a press release commenting on two in particular - the phasing in of  restrictions to cost relief for buy-to-let landlords, and the change to Support for Mortgage Interest that will see the support changed from a benefit to a loan.

This was the first Conservative Budget since 1996. The familiar theme of fiscal retrenchment continues, with the government aiming to deliver a surplus in 2019-20. This will be achieved by undertaking £37 billion of consolidation measures, of which around £17 billion were announced in this Budget. The remaining £20 billion will be announced in the autumn.

Growth forecast for the economy was largely unchanged from the March forecast. Growth in 2015 is forecast to be 2.4% per cent, falling slightly to 2.3% in 2016 and then continuing at 2.4% until 2020.

Housing market assumptions

The OBR forecasts house prices to grow by 5.7%  in 2015, followed by 4.1% in 2016, before rising to 5.6% in 2020. Property transactions are forecast to fall by 1.7% in 2015 before growth picks up, peaking at 5.5% in 2018.

Household balance sheets have continued to normalise as households have reduced their debt as a proportion of income to 145% in Q1 2015, having peaked at 169% in Q1 2008. While households take on debt over the forecast period they also accumulate assets, meaning household net wealth as a proportion of income is forecast by the OBR to increase from 8.3 times income in 2014 to 8.6 times income in 2020.

Support for mortgage interest (SMI)

The Chancellor made a brief reference in his speech to reforming Support for Mortgage Interest (SMI) from a benefit to a loan. The Budget Red Book gave a little more detail as follows: 

2.114 Support for Mortgage Interest (SMI) – During the recession, the SMI scheme was temporarily set at a higher capital level with a shorter waiting period. Summer Budget 2015 announces that, from 1 April 2016, the SMI waiting period will return to the pre-recession length of 39 weeks, but the capital limit will be maintained at the higher level of £200,000. From April 2018, new SMI payments will be paid as a loan. Loans will be repaid upon sale of the house, or when claimants return to work. Payments will accrue interest at a rate tied to the OBR forecast of gilts.

We have not yet found any further detail in departmental announcements on this change, but it will obviously be a key area for the CML and members.

Buy-to-let higher-rate cost relief restriction

The Budget introduces a measure that will restrict cost relief (including mortgage interest) to basic rate tax. It will be introduced gradually from 6 April 2017, with the phasing as follows:

  • in 2017-18 the deduction from property income (as is currently allowed) will be restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction.
  • in 2018-19, 50% finance costs deduction and 50% given as a basic rate tax reduction.
  • in 2019-20, 25% finance costs deduction and 75% given as a basic rate tax reduction.
  • from 2020-21 all financing costs incurred by a landlord will be given as a basic rate tax reduction.

There is further information in an HMRC factsheet.

From April 2016, the government will replace the Wear and Tear Allowance with a new relief that allows all residential landlords to deduct the actual costs of replacing furnishings. Capital allowances will continue to apply for landlords of furnished holiday lets. The government will publish a technical consultation shortly.

Rent-a-room relief

For people who rent out a room in their property to temporary or permanent lodgers, the government will increase the level of income that can be received before tax has to be paid (rent-a-room relief) from £4,250 to £7,500 from April 2016. Further detail can be found in the HMRC's Budget overview.

Inheritance tax on property

This measure introduces an additional nil-rate band when a residence is passed on death to a direct descendant. This will be £100,000 in 2017-18, £125,000 in 2018-19, £150,000 in 2019-20, and £175,000 in 2020-21. Any unused nil-rate band will be able to be transferred to a surviving spouse or civil partner.

The additional nil-rate band will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants.

Further information is available in this factsheet.

Housing benefit and social rents

Most of the announcements on housing benefit had been extensively trailed and were not a surprise:

  • No automatic entitlement to Housing Benefit for those aged 18-21 and claiming Jobseekers Allowance;
  • Benefit cap reduced from £26k to £23k for those in London and to £20k for those outside London;
  • Limiting backdating in Housing Benefit – From April 2016, Housing Benefit claims will be backdated for a maximum of 4 weeks.
  • “Pay to Stay” for high-earning social tenants: From 2017/18, those earning more than £40k in London will have to pay market rents; Outside London those earning more than £30k will have to pay market rents. Government will consult on how this can be implemented.

The rent that housing association landlords can charge will be reduced by 1% per year for the next 4 years. This change will be taken forward in a Welfare Reform and Work Bill to be introduced tomorrow, 9 July. The announced rent reductions reverse the direction set by the formula for rent increases of CPI + 1% each year, which was to have been in place for 10 years from April 2015. This will impact housing association landlord income over time. We will be assessing the potential impacts of this decision for commercial funders to the sector. 

Help to buy ISA - start date 1 December

The Budget announced that the start date for saving into a Help to Buy ISA will be 1 December 2015.The Help to Buy ISA scheme was announced in the March Budget. It will support people saving up for their first home by providing them with a maximum government bonus of £3,000 on £12,000 of savings. First time buyers will be able to deposit £200 per month. The Red Book says: first time buyers will be able to make an additional one off deposit of £1000 so that they can start saving now.

Need more information?

The full Budget pack is available on the HM Treasury website. Please contact us if you wish to follow up on the CML's work on the issues.