The UK’s financial stability has historically mirrored the health of the housing market sector. In the wake of Covid-19 when lockdowns first ensued, the market briefly all but froze. But as a result of the stamp duty holiday and various other economic responses from the government, the sector has bounced back - and, thanks to the Chancellor’s latest budget announcements, it should continue to do so.
Here is a summary of the main points relevant to first-time buyers, homeowners, landlords and potential investors.
Stamp Duty Holiday extended to June
Prior to the Budget statement, around 100,000 ongoing transactions were at risk of not completing before the 31 March deadline, so the stamp duty holiday extension will welcome news for many.
What is it?
The stamp duty holiday on house purchases in England and Northern Ireland has been extended to 30th June, which means homebuyers will have no tax liability on sales up to £500,000. So far, this scheme has helped hundreds of thousands of people to buy a home.After June, “To aid a smooth transition” to the original property taxation rates, Rishi Sunak announced that the nil rate band will decrease to £250,000 - double its standard level - until the end of September. The government will then return it to the usual level of £125,000 from 1st October.
Buy In Leyton For Under 500,000
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How will this affect homebuyers, homeowners and landlords?
There are big savings to be had on the first £500,000 of any sale. Following the initial government announcement to introduce a stamp duty holiday, the market saw house hunters, relieved of costs, making moves that induced much momentum in the market. Sellers were also eager to take advantage and complete transactions in time.
The stamp duty holiday extension could also pave the way for older homeowners living in larger properties to downsize more easily. Currently, nearly nine million bedrooms in the homes of older people are lying empty.
It could also be an incentive for landlords to benefit from this from potentially thousands of pounds in savings if they’re thinking of investing further. We recently did some data-analysis into the highest rental yields in London which you can read here.
Furthermore, the knowledge that a homebuyer is relieved of large stamp duty costs can also be an incentive for homeowners looking to move to stick to original asking prices to get a sale.
According to research, March is the best month to put your property on the market in the UK if you want to sell quickly and for the best price - and this March will be no exception. If you are considering selling, you can read more on our new sales package here, and get an instant online property valuation.
A new mortgage guarantee system to “Turn generation rent into generation buy”
What is it?
The mortgage guarantee scheme will increase the availability of 95% Loan-to-value mortgage products, enabling hopeful homeowners to get on the property ladder with a considerably smaller deposit than they perhaps thought they had to save up.
The mortgage guarantee scheme will provide lenders with an option to take out a government guarantee to cover a portion of the losses incurred as a result of foreclosure. A commercial fee will be charged by the government for the provision of this scheme with compensations paid out to cover a portion of any losses incurred.
Chancellor Rishi Sunak said that the scheme is designed to turn a generation of renters into home buyers. He went on to say, “Even with the stamp duty holiday cut, there is still a significant barrier to people getting on the housing ladder - the cost of the deposit. So I’m announcing today a new policy to stand behind homebuyers - a mortgage guarantee.”Several of the largest lenders, such as Barclays and HSBC, will be offering these 95% mortgages from April. The policy should allow lenders to offer mortgages covering 95 percent of a purchase price of up to £600,000.
How will this affect first time buyers and homeowners?
This scheme is great news for homeowners who are able to raise a 5% deposit to purchase a home. These mortgages haven’t been available for a while since Covid-19 broke out - with most buyers having to save a much larger sum before securing property.
The uncertainty that Covid-19 created caused lenders to withdraw their offers of 95% mortgages and instead begin demanding 10-15% deposits, while simultaneously charging far higher interest rates. Thankfully, these rates are starting to drop back to pre-pandemic levels, and with this new guarantee scheme being announced, many more first-time buyers are likely to start entering the property market.
If you are looking to buy a property, get in touch with our mortgage experts at Portico Finance. As well as advising on mortgages, we can offer a wider choice of great mortgage deals. If you would like to find out more, reach out to us on firstname.lastname@example.org or 07824 353803 or 07824 353800.!!/a>
Corporation tax on company profits is set to rise from 19% to 25% in April 2023, although rates are to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000.
Large buy-to-let landlords who have incorporated will be hit by this increase in Corporation Tax and Capital Gains Tax. It will now be more important than ever to be smart with taxes.
£400M investment for theatres, museums, galleries and live music venues
What is changing?
A significant investment of £408m will be supplied as extra funding to revitalise Britain’s suffering culture sector and help to ensure the survival of theatres, galleries, museums and live music venues as lockdowns eventually ease.
How will this affect landlords?
Many London landlords will have been struggling due to the COVID-19 pandemic putting pressure on renters, with some even moving out of the city to save on rental costs.
As a result, the announcement that £400M investment is being made to support the arts and high street businesses such as cinemas, theatres and clubs will help improve the overall attractiveness of the city to tenants.
The £20-a-week uplift in Universal Credit will be extended
What is changing?
Those receiving Universal Credit will be paid an additional £20 per week for the next six months to help them to cope with the financial hardships that have resulted from the pandemic.
How will this affect landlords?
This will provide short-term relief for those living on the lowest income. The extra £20 a week could help low income families maintain their rent payments.
The Furlough scheme will be extended until the end of September
What is changing?
The furlough scheme - which covers 80% of an employee’s wages for any hours that they cannot work as a direct result of the pandemic - has been extended through until the end of September.
How will this affect homeowners and landlords?
The Coronavirus Job Retention Scheme has protected over 11 million jobs since it took effect in March 2020 and the extension of these schemes will continue to allow many to maintain their costs of living, including rent and mortgage repayments.
Other tax changes
Other Budget 2021 taxation points that were announced include:
- No changes to rates of income tax, national insurance or VAT
- Personal income tax allowance to be frozen at £12,570 from April 2022 to 2026
- Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026
- No changes to inheritance tax or lifetime pension allowance or capital gains tax allowances
The 2021 Budget has been generally positive for the property market. Many of the announcements will support the property market’s recovery, and could make the dream of home ownership a reality to many, too. The stamp duty holiday coupled with the mortgage guarantee scheme has positioned the sector well for an influx of new buyers - so, if that’s you, now could be your chance to act.
You can read the Chancellor's full speech on the Government website here.
If you could like any advice on the new changes or if you are interested in buying, selling or letting your property, get in touch with our property experts today on 020 7099 4000.!!