With all we’ve been through this last year: the pandemic itself, the strange new way of life, it’s the economic turmoil, which has hit many hard. There have been repercussions for the property industry, too. Here’s what Chancellor Rishi Sunak delivered in this year’s 2021 Budget and what it means for the property industry.
Fixing the problems
As Rishi Sunak explained in the opening of the budget this year, “Coronavirus has caused profound damage.” And it is this damage which needs fixing, to get the country on the path to recovery. And although the property industry was given a boost last Summer with the stamp duty cuts, there were still many who could not afford a new home. One of the reasons for this was the fact banks pulled their 95% mortgages off the shelf, in response to the economic risk face by the pandemic.
And with the closure of building sites in the first lockdown, there were shortages in delivering new housing, something which has been an issue for several years. There were also delays forecast to homes for which sales had been agreed with the Help to Buy scheme, which was scheduled to come to an end this March. This led to an extra two months being granted for the existing Help to Buy Equity Loan, until 31 May 2021.
Update on Stamp Duty Cuts
One of the first points Rishi addressed in his budget, was an update on the Stamp Duty Holiday. Of course, there has been much speculation about an extension of this scheme, and a lot of call for a smoother transition to its end. It appears these comments have been taken on board, especially since there were fears that many thousands of home sales could and would fall off a cliff edge, should nothing be done.
It has been confirmed in the budget that the £500,000 nil rate band is to be extended until 30 June 2021. And from there, to allow for a smooth transition to its end, the government agrees to double the standard level at which people start paying stamp duty, to £250,000 until the end of September. The scheme will then come to an end and go back to its usual £125,000 level from 1 October 2021.
Government-backed 95% Mortgages
The budget outlined acknowledgement of the barriers faced by many when it comes to getting onto the housing ladder. The Chancellor shared the start of a new policy to stand behind homebuyers with the commencement of a new mortgage guarantee. It is aimed at first-time buyers and those who can’t afford big deposits to buy a home.
Most banks withdrew from offering mortgages with 5% deposits due to the Coronavirus pandemic. But Rishi Sunak confirms today that the biggest banks in the country have agreed to offer 95% mortgages for homes up to the value of £600,000, backed by a government guarantee, from April 2021. This step shows the government’s commitment to helping younger homebuyers, by turning ‘generation rent’ into ‘generation buy’.
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