On Wednesday 3rd March, Chancellor Rishi Sunak delivered the Spring Budget. Including support for workers, businesses and the economy, here’s how it could impact the UK property market.
The Spring Budget sets out the country’s current financial situation and plans for the year ahead. And the government is continuing to introduce and extend a raft of measures in response to the COVID-19 pandemic.
In the Spring Budget, Rishi Sunak announced support for workers and employers, help for businesses and freezes on certain taxes. The property industry is also receiving direct support from the government. The extension to the stamp duty holiday and the introduction of the new mortgage guarantee scheme will boost the sector.
Iain McKenzie, CEO of The Guild of Property Professionals, comments: “In the 2021 Budget, the Chancellor gave the property market a double shot in the arm today, with a boost from the Stamp Duty holiday extension and 95% mortgages.”
Stamp duty holiday extension
The stamp duty holiday, which was set to end on 31st March, has been extended for three months until 30th June. This will be good news for many buyers and sellers in England and Northern Ireland who were worried their transactions wouldn’t complete in time for the stamp duty savings. The extension will also ease some of the pressure on conveyancers, lenders and surveyors.
To smooth the transition back to normal stamp duty rates, there will be a tapering period for three months. The stamp duty threshold will temporarily sit at £250,000 from July until the end of September. Then, from 1st October, the stamp duty threshold will return to the normal level of £125,000.
Guy Gittins, CEO of estate agency Chestertons, says: “The Chancellor’s confirmation of a stamp duty holiday extension comes as a relief to hundreds of thousands of people who will be able to complete their property transactions with substantial tax savings.
“Whether a three-month extension is enough, however, remains to be seen. As we are witnessing the stamp duty holiday’s positive impact on the housing market, we believe there’s a strong case for the stamp duty tax system to be comprehensively reviewed; a thought that is likely to remain a hot topic over the next few months.”
Mortgage guarantee scheme
A new mortgage guarantee scheme will help homebuyers with 5% deposits secure mortgages. This will support buyers with smaller deposits who are purchasing properties worth up to £600,000. It’s designed to help more first-time buyers who have been impacted the most by the lack of mortgages available with smaller deposits.
The government will back portions of the mortgages to entice lenders. Rishi Sunak said many of the largest UK lenders will be offering mortgages through this scheme starting from April and others will follow suit.
Guy Gittins, CEO of Chestertons, says: “Any additional assistance for first-time buyers is always welcome. First-time buyers were hit particularly hard by the lack of mortgage availability during the pandemic.
“As such, the government’s introduction of a 95% LTV mortgage presents good news for first-time buyers, keen to get on the property ladder. Another audience likely to benefit are existing home owners wanting to trade up or re-mortgage to release equity.”
Within the Spring Budget, the furlough scheme was extended until the end of September. The Self-Employed Income Support Scheme will also be extended for a four and fifth grant. More self-employed people will also be eligible for it than the previous grants.
This support will likely impact the economy and property market. Keeping unemployment levels down and increasing job security will be good for those looking to buy, invest and move house. Additionally, for tenants in the private rented sector, the extension of measures will also prove beneficial. Adding more job and financial security will bring more certainty to the lives of renters.
During the COVID-19 crisis, some tenants in the UK have had to ask for lower rents or payment breaks. Industry bodies ARLA Propertymark and the National Residential Landlords Association feel there needs to be more direct financial support for tenants, which will in turn help landlords and the private rented sector as a whole.