What do the latest Budget changes mean for you? Here’s what you need to know.
It’s finally here - the news we’ve all been waiting for. This afternoon, Chancellor Rishi Sunak outlined changes to boost the country’s economic recovery, which included many welcome plans for the property market.
The Stamp Duty holiday is being extended for a further three months until September and 5% deposit mortgages will benefit from a government guarantee.
"This is fantastic news,” says property expert Toby Phillips (Managing Director, Countrywide) “It means buyers can take advantage of upfront savings and this could potentially boost house prices even further. Many people were unsure about the state of the economy and so putting off their moves because of it. We hope that this update has given them the boost to go out there and move home. The 95% mortgage will help hundreds of thousands of first-time buyers get on to the property ladder. My advice is, don’t delay. Make the most of this fantastic opportunity."
What does the Stamp Duty holiday extension mean for me?
This is fantastic news if you’re looking to buy a property this year. The £500,000 nil rate tax band will now end on 31st June, rather than 31st March, which means there’s absolutely no Stamp Duty paid on the first £500,000 of a property purchase. From 1st July this will fall to £250,000. This means that you'll pay no Stamp Duty tax on any properties under £250,000 until the end of September. Now is the time to move.
Benefits if you’re selling a property
Buyers are saving thousands in tax costs. This means you are more likely to achieve a better price for your property. Equally, when you come to purchase a new main home, you would usually have paid a higher level of Stamp Duty as you’re not a first-time buyer. However, under these new tax changes, you could find yourself saving a tidy lump sum.
Benefits if you're a landlord or buying a second property
There’s also great news for landlords and those of you purchasing a second or additional property. Where previously there would have been a higher buying tax rate and an additional 3% tax fee, now anyone looking to purchase will only have to pay 3% up to £500,000. For this reason, buying a property whilst these tax cuts are in place is a great option for landlords and second-homeowners.
Are 95% mortgages back?
In a bid to help more people onto the housing ladder, Rishi Sunak announced that a “government guarantee” will be offered to first time buyers and home movers on mortgages if they have a 5% deposit. For those of you with small deposits, you’ll know that finding a 95% LTV mortgage has been pretty much impossible in recent months. But, with their sights set on ‘turning generation rent into generation buy’, the government will take on some of the risks associated with low-deposit mortgage lending. The new Mortgage Guarantee scheme will help lenders to provide 95% loan-to-value mortgages to both first-time buyers, and existing homeowners up to the value of £600,000. This is fantastic news for those of you looking to get onto the property market this year.
What is expected for the broader economy?
The Office of Budget Responsibility is now predicting the UK will see a “swifter and more sustained recovery than initially expected”. The national economy is predicted to return to pre-COVID levels by Summer 2022.
So, what’s next?
Who knows when there will be an opportunity like this again? Where you could potentially save thousands on Stamp Duty tax and also get on the property ladder with just a 5% deposit? The Budget announcement is designed to give the UK economy a shot in the arm and, at the same time, it brings with it the opportunity to save thousands.
We want to reassure you that we are taking all the safety precautions necessary and following the latest government guidance so that everyone can continue to move safely throughout 2021.
Get in touch to see how we can help you with your property journey today.