By Stephanie Charman, Head of Mortgages and Insurance at Mortgage Intelligence
Looking ahead to the mortgage market in 2017, we have compiled a short list of key changes and events to keep your eye on. This will help keep you and your clients ahead of the game in 2017.
Now that the government has confirmed it will end the Help to Buy: Mortgage Guarantee Scheme, or Help to Buy 2, at the end of 2016, many are wondering what the future holds for the first-time buyer market after the scheme has helped so many people onto the property ladder.
Whether the market is ready for life without Help to Buy 2 is not fully clear, even though a growing number of lenders now have, or will have 95% products available outside of the Help to Buy scheme.
The 2017 autumn statement may indeed look to address the risk to the high LTV market, perhaps with the addition or alteration of housing schemes. Either way, the support of the low deposit arena is crucial, with the current affordability issues facing first-time buyers in the UK.
One of the most important events in the industry calendar will be Chancellor Philip Hammond’s annual Budget speech. After a turbulent few months post-BREXIT some experts are preparing themselves for more changes as the government tackles the possible consequences of leaving the EU.
The tax relief that landlords of residential properties get for finance costs will be restricted to 20%, which will be gradually introduced from April 2017 and will be fully in place by 6 April 2020.
These changes could have implications for landlords’ tax positions, but a basic rate tax payer may not see an impact. However, buy-to-let property rental income could now affect the overall tax position, which is the unintended consequence of moving from being a basic rate taxpayer to a higher rate taxpayer.
Limited companies, set up for the sole purpose of buying and letting property, will not be affected by the changes. Therefore some landlords are considering setting up companies to mitigate the personal impact of the tax relief changes.
The new Lifetime ISA will launch in April 2017 and allow people to save up to £4000 a year towards buying their first property or for retirement with a 25% government bonus.
Many people may be more sensitive to the details after some people felt slightly misled by information regarding the original Help to Buy ISA and deposits on property. It is currently unclear how many accounts will be available in April 2017, as lenders are unable to commit to firm launch dates due to delays on account details from the government.
Chancellors have been required to present two economic updates a year since 1976. Yet, there are reports that the autumn statement may be scaled back or even scraped in the future. Chancellor Philip Hammond wants to move away from ‘gimmicks’ and focus on fiscal forecasting. But some suggest this may be an impossible task with the uncertainty of BREXIT.
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