Latest Property News from the 2021 Budget- Stamp Duty & 5% Deposits
In the budget, the Chancellor has confirmed the launch of a mortgage guarantee scheme. This is going to be available to homebuyers who have a very small deposit. Rishi Sunak has stated that some of the biggest lenders in the industry are going to be offering 95% mortgages as of next month. This is going to be backed by the government. Lenders who are able to provide mortgages to homebuyers with a low deposit should kickstart the economy and it should also pave the way for those who might have been struggling as the result of the coronavirus.
Some of the banks who are going to be offering the scheme include Lloyds, Santander, NatWest, Barclays and of course, HSBC. Virgin Money are going to follow right after these initial banks are able to get their policy in place. The Prime Minister has stated that they want to turn a generation of renters into a generation of buyers.
A Lifeline for First Time Buyers
First-time buyers have historically been a huge part of the mortgage market. They are responsible for 350,000 purchases, every single year. During the pandemic, house prices rose rapidly and when you combine this with the fall of available mortgages, it’s not surprising to see that first-time buyers are some of the worst affected.
The scheme is going to be available to first-time buyers and homeowners who are able to secure a 5% deposit against a property that is worth up to £600,000. The mortgages are able to be fixed over a period of 5 years, giving a high level of security during these uncertain times.
Rishi Sunak has also confirmed that the holiday for Stamp Duty is going to be extended by a total of 3 months. The band rate will then be set at £250,000 until September 30th, when it will then return to the usual rate of £125,000. The cut in stamp duty is of course, going to help hundreds of thousands of people to buy a home. It’s also going to give the country some level of protection during this very difficult time. This will help some purchases to continue with their own SDLT-free transactions, who would have otherwise struggled to comply with the deadline of March 31st. There is a risk that this may act as a catalyst for new purchases which are now underway, hoping that they will be able to complete by the deadline. Numerous calls have been made for the stamp duty to be extended and MPs have also considered a tax break which has garnered 130,000 signatures so far. This is incredible to say the least and it just goes to show how much time and effort people are putting in to ensure that the UK economy is supported during this very difficult time. Stamp duty holidays and first-time buyer mortgages are going to have a vital part to play in the recovery of the economy.
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