On Wednesday, 3 March 2021, Chancellor Rishi Sunak announced the Spring Budget and extended their support for workers, businesses, and the economy. We must now analyse the spring budget and understand how it could impact the UK property market. The Spring Budget carries out a plan of action for the country’s current and a year ahead financial situation. On the other hand, the government is introducing and extending various measures to lower the effects of COVID-19 on the UK economy.
Spring Budget has played an essential role for workers, employers, businesses, and even freeze certain taxes to lower down the burden on people. The government has also extended its direct support to the property industry. In a move to boost and stimulate the property sector, the government has introduced the new mortgage guarantee scheme and made an extension to the stamp duty holiday.
As per the statement by Iain McKenzie, CEO of The Guild of Property Professionals: “In the 2021 Budget, the Chancellor gave the property market a double shot in the arm today, with a boost from the Stamp Duty holiday extension and 95% mortgages.”
The stamp duty holiday extension, which was about to end on 31 March 2021, will make a huge difference for the buyers and sellers in England and Northern Ireland as the government has extended it for three months until 30 June 2021. The three month extension period will be a huge relief for the people who were going through the sales process since last year and expecting the benefits through the stamp duty savings. This will also ease some of the pressure on conveyancers, lenders, and surveyors.
From July to the end of September, the stamp duty threshold will be set at £250,000 to smooth the transition back to normal. On 1 October 2021, the stamp duty threshold will then revert to its normal level of £125,000.
Guy Gittins, CEO of estate agency Chestertons, says: “The Chancellor’s confirmation of a stamp duty holiday extension comes as a relief to hundreds of thousands of people who will be able to complete their property transactions with substantial tax savings.
We are witnessing a positive impact on the property market because of the stamp duty holiday extension. We believe that the stamp duty tax system should be comprehensively reviewed to understand whether the 3-month extension is enough or more is needed.
Under the new guarantee mortgage scheme, which will be launched in April, it will help the buyers, especially the first-time buyers who are willing to purchase properties worth up to £600,000 with a smaller deposit of just 5% but are being hampered by a lack of mortgages The government will guarantee parts of the loans on properties worth up to £600,000 to encourage lenders. The largest UK lenders will be offering low-deposit mortgages through this scheme starting from April. This would make it easier for more people to get mortgages for new and existing homes without putting down large deposits. This is good news for all first-time buyers as the government has introduced 95 percent loan to value (LTV) mortgage products which will help buyers with small deposits to get on a property ladder.
Guy Gittins, CEO of Chestertons, says: “Any additional assistance for first-time buyers is always welcome. First-time buyers were hit particularly hard by the lack of mortgage availability during the pandemic.
As per the Spring budget, the furlough scheme was extended until the end of September, and the Self-Employed Income Support Scheme will also be extended for a four and fifth grant.
This support from the government will impact the property market, and the UK economy positively. Keeping unemployment levels down and increasing job security will benefit those looking to invest, buy or moving to another house. Also, the extension of measures will prove beneficial for the tenants in the private rented sector.
During the COVID-19 pandemic, the tenants in the UK had to face rental payment difficulties as they were unable to pay the full rental amount, so it was necessary to ask for lower rents or payment breaks. Seeing the tenant’s situation in the UK, the Industry bodies ARLA Property mark and the National Residential Landlords Association felt that the tenants need a helping hand in the form of financial support, which will improve the private rented sector and the landlords.