This afternoon, the government’s yearly budget was released, which is set to have an impact on our housing market.
The key takeaway from Rishi Sunak’s plan is an extension to the stamp duty holiday in England until June 30th, with zero tax on the first £500k of a property’s value. Following that there will be a further exemption of stamp duty on properties, up to £250k, until September 30th. After that, the stamp duty rates return to the pre-covid normal rates, with a zero tax on the first £125k. Following the Chancellor’s announcement the Welsh government swiftly followed suit and announced a temporary increase to the nil band rate, with the threshold now at £250k on residential properties and £225k for non residential properties and land. As in England this extends until the 30th of June 2021. For more information click here.
The stamp duty holiday has given the housing market a real boost, during an otherwise dismal year, and cutting off the stamp duty holiday at the end of March would mean the potential for sales transactions to fall through at the last hurdle, as buyers struggle to get their sales through the busy system. As Nick Leeming, Chairman of Jackson-Stops puts it; “The announcement of a phased approach to the holiday’s end until September is particularly welcome at this point in the year as we enter a traditionally active period in the market. This will provide certainty to buyers over coming months and will safeguard against transactions falling through in a few months’ time, giving the market the best chance of thriving in the long term.” (Da Silva).
An additional boost to the housing market came with a further announcement by the Chancellor of a scheme to support first time buyers. This government mortgage guarantee scheme will offer 95% mortgages for houses worth up to £600,000 and is based on the Help to Buy mortgage guarantee scheme, which closed in December 2016. With the government, effectively acting as a guarantor for the buyers, they hope that the big lenders will once again start high loan-to-value lending. The aim is to keep the market buoyant and get more young people onto the property ladder. Time will tell if it is successful. With house prices rising even finding a 5% deposit may be difficult for people struggling to get onto an already inflated housing market, particularly during financially difficult times.
With spring fast approaching, coupled with these positive signs edging into the property market and buyers searching in our area at an all time high, we look forward to seeing a lot of positive action in the property market this coming year.
Following on from our post yesterday on the Budget, the Welsh Finance Minister Rebecca Evans has confirmed that the Land Transaction Tax temporary reduction period in Wales will be extended by a further 3 months so that it will end on 30 June 2021. Until then, there will be no tax payable on property sales below £250,000.* Full details can be found here.
*Please note – When you buy a residential property and you already own one or more residential properties you may need to pay the higher residential rates. Full details here.