Rishi Sunak released today the budget for 2021, which included the extension of the stamp duty holiday in England and Northern Ireland as well as a mortgage guarantee scheme.
The stamp duty holiday in England and Northern Ireland was before today, going to end on the 31st of March but due to fear of sales of properties falling through because of not being able to afford the stamp duty, there was a petition which went to Government to discuss. The stamp duty meant that homes up to £500,000 in England and Northern Ireland wouldn’t pay any stamp duty until the end of March. With the extension that was released today properties that fall under this threshold will not pay any stamp duty until the 30th of June 2021. Then onwards from the 1st of July 2021 this band is brought down to £250,000 until the 30th September 2021. Then on the 1st of October 2021 it will return to the threshold of £125,000. This extension helps properties that were on the verge of falling through as currently the sales process as a whole is taking longer than usual, as not only has there been an increase in sales of properties but also the pent-up demand that accumulated when the market was effectively closed in the first lockdown. So, this extension just gives buyers that extra time and benefit from the stamp duty holiday.
Over this period, it has been noted that across the UK, first time buyers have struggled in the market due to needing large deposits of between 10-15%, which could have been why the rental market has been a Landlord’s market. To move from generation rent to generation buy, amongst help to buy schemes, today also saw an introduction of a mortgage guarantee scheme, which comes into effect in April 2021. This scheme means mortgage lenders will now offer mortgages with only a 5% deposit on properties of a value below £600,000. With this means that buyers will now have the opportunity to also fix their rate for the first five years of the mortgage. This scheme will run for new mortgages taken out up to 31st December 2022.