PRESS RELEASE: Mortgage expert wants clarity on Buy to Let changes in Budget

Posted on 9 March 2016

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Ray Boulger, Senior Technical Manager at John Charcol, has outlined the areas of the Chancellor’s Budget where clear action needs to be taken and clarity given, for the good of the housing industry.

•  Buy to Let
•  Starter homes initiative
•  Real progress for first time buyers


Ray comments: “We’re expecting the final rules for the 3% stamp duty surcharge on purchasers who already own at least one property – and not before time. Since the Autumn Statement in November, mortgage lenders and advisers have struggled for clarity and advising clients has been extremely problematic.

“The Chancellor’s recent decision not to proceed with his radical pension proposals against expert advice provides some encouragement that he will reflect on responses to the consultation on the stamp duty surcharge and make the final rules less unfair.

“As drafted, the surcharge will unfairly penalise people it appears it was never designed to hit, in particular some people buying a new main residence. As the policy intention appears to be not to charge the 3% surcharge when buying a main residence, even if the purchaser(s) owns 100s of other properties, we suggest introducing a simple amendment making it clear that providing the tests for a main residence specified in the consultation document are met the 3% surcharge will not be payable.


“We also expect further details on the Starter Homes Initiative. Bearing in mind this initiative was first announced a year ago the fact that financing options for purchasers have still not been finalised with mortgage lenders is a damning indictment of the red tape the Government appears to have to go through, perhaps because of state aid rules, to agree something which should not be too difficult.


“For the Starter Homes scheme to achieve anything even approaching the Government’s target, buyers need as many options as possible, bearing in mind that, as purchases are limited to FTBs, a large number of buyers will only have a 5% deposit. Some will prefer a standard mortgage but others will prefer to use the Help to Buy equity share second charge mortgage.

“If the Government does not make this option available many buyers are likely to shun the scheme in favour of an alternative new build property where they can use this scheme, which makes a massive different to both the interest rate they pay and monthly costs.”



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