On Wednesday 3rd March, the chancellor, Rishi Sunak, announced the government’s long-awaited Budget. Two areas of particular interest to the building sector are the extension of stamp duty and the government’s plan to guarantee 95% mortgages.
After concerns were raised across the house buying industry about the March deadline for the stamp duty cut, the government has agreed to extend the existing holidays in England & Wales for another three months, until the 30th June.
From the 1st July there will be a tapering off in England to try and avoid a ‘cliff-edge’, which many in the industry were concerned about. Between the start of July and the end of September, the holiday will continue to apply to the first £250,000 of a house purchase. After the 30th September, the payment exemption will reduce to the normal level of £125,000.
When announcing the extension to the holiday, the chancellor said: ‘The cut in stamp duty I announced last summer has helped hundreds of thousands of people buy a home and supported the economy at a critical time.
‘But due to the sheer volume of transactions we’re seeing, many new purchases won’t complete in time for the end of March.’
The second point of interest for the building sector is the government’s promise to cover some of the risk of 95% LTV mortgages through offering a guarantee to lenders who provide them. This is an attempt to encourage lenders to start offering low deposit mortgages again after they were withdrawn from the market at the start of the pandemic. The chancellor identified that ‘the cost of a deposit’ remains ‘a significant barrier to people getting on the housing ladder’.
The government guarantee on 5% deposit mortgages will be available for both first-time buyers and homemovers on properties in the UK up to £600,000. This incentive has already encouraged several of the largest high-street lenders to begin offering 95% LTV mortgages again.
In this Budget, the government has made the value of the housing industry clear, stating that ‘the housing sector supports over half a million jobs’ and renewing their promise to ‘turn Generation Rent into Generation Buy.’
Budget Speech 2021 – GOV.UK (www.gov.uk)
Budget 2021: stamp duty holiday and 95% mortgages – Which? News
Government confirms plans to guarantee 95% mortgages | Mortgage Strategy
