The 2021 budget has been announced, detailing the country's current financial situation and all plans for the coming months. After a turbulent year, thanks to the pandemic that resulted in three National Lockdowns, the housing market has been very uneven. Here's what we learnt from this year's budget announcement and how it might affect the property market.
1. Stamp Duty
Stamp duty was the main concern for many due to the holiday the government put in place last year. This holiday meant that properties up to the value of £500k were not subject to stamp duty to help support the housing market during the pandemic. This is on a first home or moving property, but buyers would still incur a 3% charge if they were buying a second property.
The stamp duty holiday was due to end at the end of March, however they have extended it until the end of June.
Anyone still in the process of buying at this point has until the end of September to complete. Be warned: this doesn't come without restrictions though! The Stamp Duty threshold will be capped at £250k for three months between July and September. From October 1st, the threshold will return to the usual £125k.
For more details on Stamp Duty, check out our previous blog which covers the topic in more detail.
2. Mortgage Guarantee Scheme
Due to the mass job losses and furloughed workers across the UK, this meant that getting a mortgage on a property was near on impossible unless buyers had at least a 15% deposit. Many mortgage offers were pulled or suspended due to the uncertainty in the job market, causing a lot of stress, especially for first time buyers.
However, in the budget the government announced the Mortgage Guarantee Scheme, which aims to support buyers with their purchases by reinstating the 5% deposit. This will help buyers who are purchasing properties of up to £600k. This will also benefit first time buyers who were impacted the most during the pandemic as they were likely to have a smaller deposit.
The government will be backing portions of mortgages, meaning lenders will be more likely to offer a 95% mortgage to buyers who need it.
3. Supporting Employment
Although this announcement doesn't directly affect the property market as such, it will help to support it. The furlough scheme has been extended until the end of September and there has been further support announced for those who are self-employed.
These announcements mean an increase in job security for many so those looking to buy, invest or move house will be able to do so with more confidence than before. Supporting employment will also come as good news to landlords, who may be dealing with tenants who have asked for a break from their monthly rent or a lower monthly rent whilst their jobs have been at risk. This will support the privately rented sector as a whole.
Whilst the 2021 budget did no cover too much, property wise, we are sure there will be more announcements to follow as the UK continues to recover from COVID-19. Make sure you come back for all the latest news about the property market.
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Normette Homes specialise in property investment and tenant sourcing.