The 2021 Spring budget was announced today and here are the key points you should know related to the property industry.
The stamp duty tax holiday has officially been extended to the 30th of June, and it will be staggered out until September. Until the end of June, buyers will be still exempt from paying any stamp duty tax on any house purchases of up to 500,000. From the end of June to 30th September, the tax break will still be in place for properties up to £250,000.
Mortgage guarantee scheme
The Government have issued a guarantee scheme on 5 % deposits to encourage lenders such as Lloyds, Santander and HSBC to lend mortgages up to 95%. This scheme will be put in place to help those with small deposits purchase their own homes worth up to 600,000.
This stems from the previous "Help To Buy" scheme, with this government intervention many of those wanting to buy but unable to save for hefty deposits will now be able to join the property ladder.
How the Property market has been affected by Covid and the Stamp Duty holiday
When the first lockdown was introduced back in March 2020 the market was significantly affected with estate agents closed and residential construction at a halt.
In May after seven weeks of lockdown, the property market was allowed to re-open. Customers were once again able to view properties and move home as long as they were following the government guidelines on social distancing. Estate agents could finally re-open.
This freeze of the property market due to covid-19 caused a negative effect on property sales, according to HMRC the number of properties sold in the UK in June 2020 was down by 31.5% compared to June 2019.
In July 2020 the government announced a stamp duty holiday. This meant the stamp duty threshold was increased to £500,000, buyers could save up to as much as £15,000. This tax break was implemented in the hope of aiding buyers who had been financially affected due to covid-19. According to HMRC stamp duty makes up 2% of the treasury’s total tax take and this tax break cost the treasury an estimated £3.8bn.
Despite the extensive sum, the stamp duty holiday along with the pent up demand during the property freeze encouraged buyers and boosted the market.
There has been immense pressure on the processing of sales to meet the stamp duty deadline so this extension brings huge relief to the property market. We expect this announcement to continue to boost the market.