As young workers face fears such as car insurance hikes and property ownership difficulties, millennials can only wonder what the 2018 budget holds for them.
Chancellor Phillip Hammond has already made countless spending commitments in the past such as pledges to end austerity in general, so there appears to be little room to do something significant for the younger population.
As a result, it may be a question of what the younger population hopes won’t happen such as increased insurance premium tax which in turn increases car cover premiums. Millennials also hope the budget won’t depress salaries, raise cost of living and inflate property and rent prices.
According to Vicki Owens of Money Lens – a site focused on educating millennials about managing their money, millennials are hopeful of what the budget holds but many feel disgruntled or disengaged. The 2017 budget was considered to be the most millennial-friendly budget ever yet many felt the budget barely scratched the surface. Here are some key expectations vs. reality given Chancellor Phillip Hammond has already presented the 2018 budget.
First-time home buyers?
40% of young adults in Britain can’t afford to buy even the cheapest houses in their area. Research conducted by retail bank Aldermore indicates that millennials are looking for assistance in this regard. According to the Director of Mortgages, Damian Thompson, first-time home buyers believe the government must do more to improve their odds of owning a home.
Last year’s budget saw the abolishment of stamp duty for first-time home buyers; however, this didn’t solve underlying problems on affordability and supply. According to Aldermore’s research, 34% of millennials want policies aimed at reducing the number of empty homes across the UK. The “Help to Buy Scheme” launched more than five years ago offered interest-free loans for 5-years on up to 20% of a property’s value for a 5% deposit. 33% of millennials would want to see the scheme extended beyond new-build homes according to Aldermore.
According to Habito founder Daniel Hegarty, more needs to be done to address UK’s housing crisis. Although the Help to Buy Scheme has assisted many potential homeowners and boosted the number of new homes, the scheme hasn’t been a magic bullet for UK’s housing crisis. Hegarty sees an extension of the scheme’s end date. The government may also extend the scheme to purchase properties worth less than the current £600,000 limit.
In his 29th October budget reading, Mr. Hammond announced a limit reduction to £500,000. The Chancellor has also promised to increase the Housing Infrastructure Funding for councils by an additional £500 million. It will also be easier to allocate land for housing.
Rent to own
The millennial budget wish list also has many young renters looking at the government to make their dreams of home ownership a reality. Hegarty expects affordable housing and the property market high up on Hammond’s agenda once again. Scrapping capital gains tax or lowering it for landlords selling homes to their long-term renters could boost ownership according to Hegarty. The UK government has already taken measures to attract first-time buyers and reduce buy- to-let landlords. These measures are working. Hegarty argues incentives for landlords who want to leave the market and long-term tenants looking to buy would also work. In his latest budget reading, Hammond failed to address rent to ownership arrangements.
Last year, Hammond announced plans for a brand new discount railcard meant for individuals aged 26 to 30. The railcard was expected to save 4.5 million+ young people 33% of their rail fairs. However, the implementation wasn’t successful with website crashes experienced, and a tiny fraction of cards have been under trial. It’s expected that the railcard will return with some significant changes despite having a troubled trial period which left many in doubt.
In his most recent budget reading, Hammond has announced the return of a digital-only railcard available at 26-30railcard.co.uk in the next two months; however, it won’t be funded by the government. The millennial rail card will benefit 4 million young adults.
Young drivers in the UK aged 17 to 24 years pay the highest premiums (£1,308 per year) for car insurance. This is £593 higher than the average premium for the entire country according to statistics from Compare the Market. Young drivers have been calling for a complete scrap of insurance premium tax which is the source of their misery given the tax has doubled since 2015. Exempting young drivers from insurance premium tax will boost social as well as professional mobility for this age group while offering some much-needed relief from high costs. In the latest budget reading, Hammond chose to leave insurance premium tax unchanged.