George Osborne: helping first-time buyers.
Budget 2011 highlights
Published: 23 March, 2011
LONDON: Chancellor George Osborne revised his growth forecast for 2011 from 2.1% to 1.7%. The 2012 forecast is also down from 2.6% to 2.5%. Inflation is set to remain between 4% and 5% in 2011. In the Budget, delivered this afternoon, Mr Osborne…
backed a shared equity scheme for housing to help 10 000 first-time buyers. He also announced new planning rules to require planners to prioritise growth and jobs.
• Corporation Tax will be reduced by 2% from April 2011, rather than 1% as previously intended, and fall by 1% in the next three years, to reach 23%.
• Fuel duty will be cut tonight by a penny a litre. A fair fuel duty equaliser to moderate fuel prices to be introduced. The fuel duty escalator that adds 1 penny a litre is cancelled, but if oil prices fall, it will be reintroduced.
• Small business rate relief holiday extended by one year to October 2012.
• Personal tax allowance to rise by £630 to £8105 in April 2012 – a real increase of £48 a year, or £126 in cash terms. But, future uprating will be done using the CPI, a lower measure of inflation.
Budget housing plans: first-time buyer scheme aims to get more onto the housing ladder
The First Buy scheme will be open to those with a household income of less than £60 000 a year who can put down a 5% deposit on a new home. Housing industry insiders claim it is "window dressing the wider problem" and will benefit the construction industry more than first-time buyers.
Those who qualify will be eligible for a loan worth up to 20% of the value of the property, jointly funded by the Government and housebuilders. The loan will be interest-free for five years and only be repayable when the house is sold.
Mr Osborne intends the fund to help first-time buyers who are currently only able access mortgages requiring much bigger deposits, as lenders tightened their criteria in the wake of the credit crunch and recession. The Government hopes the fund will result in the building of 10 000 new homes and protect 40 000 jobs in the construction industry.
The Budget initiative is similar to the recent tie-up between 15 local authorities and Lloyds TSB to launch a fund to top up the deposits of local first-time buyers. The scheme, called Local Lend a Hand, allows first-timers to buy a home with a deposit of as little as 5%. But, it will also only assist a small number of borrowers, while the local authorities have been criticised for using taxpayer money to encourage younger borrowers to take on debt at a time of uncertainty in the housing market.