Budget brings shared housing extension & CGT changes
Mr Darling presented his first Budget today
Wednesday, 12, Mar 2008 01:28
The chancellor Alistair Darling has confirmed previously announced changes to the UK's capital gains tax (CGT) regime will be brought into force.
Changes announced in January will now be implemented, with the entrepreneur's relief also included to alleviate the burden on smaller businesses.
The government expects some 90 per cent of the country's 80,000 small business owners will continue to pay tax at a lower level of 10 per cent - "one of the lowest rates in the world" according to the chancellor.
The higher single band will now stand at 18 per cent.
There was also an announcement of a change in the rules for council tax benefits; with a working family with one child now gaining up to an additional £17 a week in benefits - with aim of lifting 150,000 families out of poverty.
Successes to date
The Chancellor also enthused over the one and a half million additional homeowners in the country, created by the "historically low mortgage rates" seen under Labour.
Furthermore some 95,000 families have been able to acquire property through shared ownership and shared equity schemes.
The scheme will now be extended to key workers - such as teachers and nurses - and first-time buyers will be able borrow money from new-shared equity schemes to get a footing on the property ladder.
Previously these schemes were only available to buyers able to raise three-quarters of the cost of a property. This will now be lowered to 50 per cent.
Recognising achievements in this area the government will now spend £8 billion on new, affordable and social housing over the next three years.
"This will enable the Housing Corporation to deliver 70,000 new affordable homes each year by 2010/11," said the Mr Darling.
Finally, buyers of shared ownership homes will not be required to pay stamp duty will until they own 80 per cent of the equity in homes.
However, this policy has come under attack from some quarters.
"Further, the government continues to leave the next generation high and dry by offering almost no relief in terms of tax or stamp duty," said Helen Adams, managing director of first-time buyers' website FirstRungNow.com.
"Simply allowing shared ownership property buyers only to have to pay stamp duty 'when' they own 80 per cent of the property will benefit very few individuals."
Encouragement for long-term borrowing
Chancellor Darling also sought to encourage long-term borrowing in the mortgage markets, following recent turbulence following the subprime crisis.
In 2007 30 per cent of mortgages agreed in the UK - £100 billion of lending - were funded through secondary funding markets, explained the chancellor. However, this market has now shrunk dramatically.
In response the chancellor planned to bring together, investors and lenders with the Treasury, the Bank of England and the Financial Services Authority (FSA) to find market-led solutions to strengthen these funding markets further.
There are also plans to seek stakeholder views on how to encourage more long-term fixed-rate mortgages and increase stability in the market, over periods ten, 20 and 25 years.
It is hoped this will instigate a shift in culture, away from short-term variable products, to more stable, longer term deals.
"Long term fixed rate mortgages can reduce some of the risks of taking out a mortgage, especially for first time buyers and lower income families," explained the chancellor.
Plans for the future
The Labour administration has so far committee to building three million new homes by 2020.
As part of this plan the chancellor announced 70,000 new homes would be built on public land, following a review of public sector availability - in addition to the 40,000 already under construction.
It is hoped: "[These plans will help] to improve affordability, supporting long-term stability for homeowners, and meeting the needs of future generations," continued the chancellor.
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