Stamp Duty

The Coalition has identified buy-to-let as a way of solving Britain's housing shortage and wants to attract investment into residential property by major institutions, such as pension funds, and landlords.

However, the Chancellor believes that promoting the private rental sector as a solid form of income for investors can boost homebuilding.

The British Property Federation, which has campaigned for tax changes on bulk housing purchases, said the Budget "went further than even the most optimistic within the industry could have predicted". Property agent CBRE forecast it could unlock £7.5bn of investment.

Institutions such as Aviva and Legal & General have been heavily linked with creating residential property funds, but stamp duty pushing up the cost of buying or building large portfolios has impeded investment.

However, it is now proposed that stamp duty on the purchase of more than one property will be calculated by the average value of the properties, not the bulk value. This means that if an investor buys 100 properties worth an average of £200,000, it will pay stamp duty at 1pc, equal to £200,000, rather than at 5pc, equal to £1m. The measure will cost the Treasury £560m over five years.

George Osborne has also launched consultations on making it easier for residential investors to become a Real Estate Investment Trust, which would mean they do not pay capital gains tax. In the 2012 Budget, the Chancellor is proposing to scrap the 2pc entry charge that landlords must pay to become a Reit and scrapping the rule restricting Reits to stock market-listed companies. This will allow pension funds to turn property portfolios into Reits and potentially allow smaller buy-to-let landlords to benefit from tax breaks on capital gains.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "Changes to Reits and stamp duty will.... provide a revolution in how rented homes are supplied." However, the Chancellor also aims to stimulate investment through traditional housebuilders. He will allow offices to be converted into homes without planning permission and auction public sector land for development.

Shared Equity Scheme for first time Buyers

A new Shared Equity Scheme for first-time buyers has been called as a "shot in the arm" for the housing market according to the BBC.

At least 10,000 first-time buyers will be eligible for the Firstbuy scheme, announced by Chancellor George Osborne. The House Builders Federation welcomed the move and said it would have economic and social benefits.

This would be funded by the levy on banks, Mr Osborne said. Some £210m will be spent in England, with the other £40m in Wales, Scotland and Northern Ireland.

First-time buyers have been struggling to get a foot on the housing ladder.

The latest figures from the Financial Services Authority (FSA) showed that they required a large deposit.

The City regulator said that only just over 2% of new mortgage lending in the final three months of 2010 was to those who could offer a small deposit of less than 10% of a home's value.

Lenders have said this has been the result of a squeeze on the amounts available to lend, and a lack of appetite from new borrowers.

The Firstbuy scheme would see the government and house builders offer loan help for first-time buyers purchasing a newly-built home.

Buyers must save a deposit worth 5% of their property's value, with the government and housebuilders putting up 10% each through an equity loan, enabling people to qualify for 75% loan-to-value mortgage.

The equity loan would be interest-free for the first five years, with interest charged at 1.75% in year six, and at inflation plus 1% thereafter.

A similar temporary scheme was introduced by the previous Labour government, and was considered a success by house builders.

In a separate announcement, the Support for Mortgage Interest scheme, which is aimed at subsidising the interest payments of mortgage holders across the UK who become unemployed, will be extended for another year from January.

Our overall views

We certainly see more interest from property funds and larger groups looking to buy residential property in the UK, and these potential changes in stamp duty can make a significant difference to buying costs - so a very positive step.

The interest has been strong due to the high yields, and reliable returns available.

The opportunities for first time buyers, should encourage housebuilders and first time buyers alike. Lenders will still look at individuals' overall affordability, as they will have, hopefully, learnt from previously overexposing themselves to borrowers on low salaries.

These points should strengthen properties at the buy to let end of the market further, and can potentially re-energise the market, which is a positive clearly, although this may mean it is harder to get as strong discounts for investors with funds to buy!

Alan Forsyth.