George Osborne was always going to be on a hiding to nothing with this one, especially from the contractor community. He started by boldly announcing that “this is a budget for those who aspire to work hard and get on”. Inspiring words indeed, but undone a little in the detail that he subsequently presented. The headlines promised much for hard-working contractors, particularly around paying less tax, but the detail was a little disappointing.
An in-depth report commissioned by the ratings agency Moody’s claims that as many as three quarters of all mortgage borrowers over the age of 60 are utilising the interest only method to repay their debt. In a year which has seen the vast majority of lenders restricting or even retracting the method completely as a viable plan of repayment, the news will bring the inherent issues of interest only usage back into the spotlight.
This week a motion presented to the House of Commons by Labour MP’s, to introduce a mansion tax on high value UK properties, was defeated after voting concluded. The mooted plan to introduce a new levy on properties worth more than £2m was brought to the Commons by Shadow Treasury minister Chris Leslie, but the final count stated 304 votes against, to 241 in favour of the move.
The Bank of England have again maintained the base rate at 0.5%, now making it 4 years of record low rates in the UK.
HM Revenue and Customs are to begin enforcing heavy tax fines on current and historically undeclared profits from the sales of second homes and buy to let properties. As part of the proposed penalties, HMRC will offer leniency through “preferential terms” by charging lower penalties for a short period. However, if guilty parties do not heed warnings and come forward, the taxation penalties will be far greater.
A market survey carried out by financial resource website Moneyfacts, states that fixed rates are at the lowest levels since the product type’s inception in 1989. On average, it is now possible to secure a fixed rate at around 4 per cent, with previous averages over the past 5-10 years ranging between 4.5-5.5 per cent.
As part of new plans to be unveiled during the Liberal Democrats spring party conference, Vince Cable was questioned this week on the news that the party are considering championing a super tax on second property holders. The plan would be to implement an annual charge to those with additional properties to their home above the value of £2 million, including buy to let owners that hold a portfolio above this sum.
It has been revealed today that the Treasury is in initial talks with mortgage lenders and banking trade groups to try and implement an acceptable process for wide-spread lending at 95 per cent loan to value. The formation of the strategy is to assist banks in lending higher risk loans, by introducing mortgage indemnity guarantees to safe guard against the risk of lending with smaller securities to back the process.
The Bank of England have again decided to maintain the status quo with the underlying rate of interest in the UK, as well as pausing with any further economic stimulus via quantitative easing. The economy continues to show signs of a sluggish recovery, as Bank of England and Government initiatives take hold to kick-start the housing market. It appears that the positive news will continue for contractors looking to enter the housing market, which is good news for the new man at the top.
New figures from the Bank of England show that UK mortgage approvals have risen to the highest level in almost one year, suggesting that the government’s Funding for Lending Scheme is fulfilling its goals of boosting the mortgage market by making more money available to home buyers.