What does the Spring Budget mean for the property market?

tapered extension to the stamp duty holiday and a government-backed mortgage guarantee scheme are among the measures aimed at helping home buyers and sellers delivered by Chancellor Rishi Sunak in the Spring 2021 Budget. 

Here is everything you need to know about the Chancellor’s property-related Budget announcements. 

Stamp Duty Holiday extension

The temporary stamp duty holiday in England, Wales and Northern Ireland has been extended by three months.

The extension means if you are buying a home up to the value of £500,000 you will not pay any stamp duty if the purchase is completed by 30 June 2021.

Then, in England and Northern Ireland, to smooth the transition back to normal, the nil rate threshold will be set at £250,000 until the end of September, before returning to the usual threshold of £125,000 on 1st October 2021.

This tapered return to the usual threshold will not apply to Wales. For transactions completing on or after 1 July 2021, the £250,000 threshold will revert to £180,000. The Welsh ministers have decided not to give a reduced stamp duty holiday.

This additional time will make a big difference to help those stuck in the logjam complete their purchase in time before the new end of June deadline.

Rightmove property data expert, Tim Bannister, says: “Buyers who have recently agreed a sale now have a race on their hands to see if they can also make use of the stamp duty savings, but many with purchases over £250,000 will find that time is too tight to complete before the end of June and so shouldn’t be factoring this into their purchase.”

For more information on the latest guidance, visit the GOV.UK website here.

What is the mortgage guarantee scheme?

The government has introduced a 95 per cent loan to value (LTV) mortgage guarantee scheme to help buyers with small deposits get on the property ladder.

Under the new scheme, which launches in April, home buyers will be able to purchase homes priced up to £600,000 with a deposit of just 5%.

The Treasury has said it will guarantee parts of the loans on properties worth up to £600,000 in order to encourage lenders to reintroduce low-deposit mortgages.

Low-deposit mortgages have largely been withdrawn by lenders during the coronavirus pandemic, which meant many first-time buyers have faced raising deposits of 15-20% in order to secure a loan.

The Chancellor said many of the big lenders, including Santander, Lloyds, Barclays and HSBC are backing the scheme and will be offering “government guaranteed” mortgages from next month.

What does this mean for the property market?

Rightmove saw an immediate spike in activity on Budget Day following the chancellor Rishi Sunak’s announcement of an extension and tapered ending to the stamp duty holiday and the introduction of 5% deposits, as the portal recorded its busiest day ever.

Rightmove says that visits to its website on Wednesday 3rd March surpassed 9 million for the first time, overtaking the previous record of just over 8.5 million visits recorded two weeks ago.

There was a significant increase in the number of potential purchasers contacting estate agents last Wednesday, up 82% on the same day last year.

This means that buyer activity is at a record high. The tapered end to the Stamp Duty Holiday will help ease the property market back to ‘normality’ and the mortgage guarantee scheme will allow buyers to secure loans without the need for a hefty deposit, with lender’s offering pre-pandemic LTV products, meaning more and more potential buyers will be looking to make purchases.

The time to act is now

Currently the average time for a seller to find a buyer is 65 days nationally, and Rightmove estimates that it is currently taking a further 126 days to go through the legal process to completion.

Based on this, sellers should be looking to come to market by Tuesday 23rd March if they want to make sure their buyers can make use of the tapering end to the stamp duty holiday by the end of September, according to the portal.

If you’re thinking of buying, take your first step by getting in touch with our financial advisors at Hardisty Financial. Our money experts offer free and impartial advice and have access to over 400 lenders to compare the right deal for you.

And, if you want to take advantage of the current momentum and sell for a good price, contact us now for your property valuation. On average in 2020, our properties sold for 98.67% of asking price with 42.17% of them going for asking price or above. Now is the time to sell, and if you act now, there may be tax savings to be had.

 

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