Budget 2007:
Gordon Brown delivers
his final budget speech

Homeowners were hoping that Gordon Brown would deliver a property friendly budget – his last as Chancellor, with some unexpected rewards. We say overall he took as much as he gave.

Hopes included a substantial rise in stamp duty thresholds, incentives to make homeowners properties more environmentally friendly and a sign that the inheritance tax trap might ease.

But was the Budget 2007 good for property, or just green homes? Gordon gave us:

  • Grants offered of £300 to £4,000 for pensioners installing insulation and central heating.
  • Until 2012, all new carbon free homes up to £500,000 will be exempt from stamp duty.
  • Special 'green homeloans' to be launched to help environmentally friendly home improvement.

The more that helps make our homes green the better, but the Government must make sure it delivers real benefit not just lip service. Carbon free homes will be exempt of stamp duty up to £500,000, but Mr Brown's claim that this limit is imposed to stop the rich taking advantage may not work. House builders are more likely to build expensive zero carbon homes, as the opportunity to get investment back is easier. This technology would then trickle down to average properties - this will now be less likely.

In general Gordon took as much as he gave in the budget so some may think it was his pitch for number 10.

Anglian Home Improvements welcomes the Chancellor’s announcement that consumers could be set to benefit from VAT reductions on energy saving and environmentally friendly home improvements. The Chancellor unveiled a surprise proposed VAT reduction from 17.5% to 5% for consumers keen to insulate their home with double glazing and other energy saving and eco friendly products that will help to beat global warming. The Treasury’s tenth budget report said: “Energy efficient windows have a major role to play in reducing household energy use and increasing the energy efficiency of existing homes.”

Melanie Russell, Anglian’s director of communications, says: “Every homeowner should think seriously about how environmentally friendly their house really is as it could make a big difference in terms of the value of their property.”

SmartNewHomes.com managing director David Bexon is another fan of Gordon. He welcomes the Chancellor’s pledge to make all carbon zero homes under £500,000 exempt from stamp duty until 2012. But he has this warning: “I fear that Government’s latest pledge of stamp duty exemption is nothing more than an empty gesture if earlier admissions from the Treasury are true, that there are currently only 24 carbon zero homes in the UK.”

The Royal Institution for Chartered Surveyors is sniffy about the Chancellor’s green measures, however. “The exemption from stamp duty for only new zero carbon homes over £500,000 is disappointing. Increasing the threshold from £125,000 to £500,000 is a step in the right direction but this initiative continues to miss the main built environment carbon emissions culprit, the existing stock,” says RICS head of UK public policy Brian Berry.

Paul Smith, chief executive of estate agent Haart, says that the real issue is the Chancellor’s refusal to adjust the stamp duty levels other than for zero carbon homes. “With the average value of a property in London now over £260,000, the majority of first-time buyers are looking at properties above £250,000 but they don’t have the vast cash reserves to fund the 3% stamp duty of £7,500,” he says. “Most are stretched to the limit as it is. Stamp duty will remain a great stumbling block for many and the Chancellor has done nothing to help.

The Chancellor also unveiled grants in the region of £4,000 for pensioner households investing in insulation products, again targeting the energy efficiency of homes. Robert Bryant-Pearson, chief executive of chartered surveyor Allied Surveyors, comments: “This will add to the value of their principal asset and make these homes more saleable.”

But the Chancellor’s moves to relax inheritance tax thresholds is not all that it seems, says Henry Pryor, founder of PrimeMove.com. Mr Pryor calls it a further stealth tax on a stealth tax. “In pledging to raise last year’s inheritance tax thresholds from £285,000 to £350,000 by 2010 he [the Chancellor] is in effect bamboozling the home-owning public,” he says. “By not raising thresholds today the Chancellor has ignored the fact that house prices have risen by 10% over the past year. It should have gone up to £313,500 immediately to keep pace with past house-price inflation. The proposed £350,000 threshold in March 2010 only represents a rise of 11.6% from the £313,500 it should be today – much less than 5% per annum over the next three years. If house prices rise again over the next three years as they have done during the last three years, the inheritance tax threshold in 2010 should be £429,495 – a massive £80,000 shortfall of what it should have been to keep tax thresholds in line with the current rate imposed last year.

The Chancellor is shafting the future generation.”

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