The Chancellor of the Exchequer delivered the Budget 2021 last week, where he announced several measures to help the economy recover as lockdown restrictions are eased over the coming months. In this article, George Square Financial Management shares details of the new announcements regarding mortgages and the stamp duty land tax (SDLT) extension, plus the positive impact they are expected to have on the economy.
The Budget 2021 had a number of encouraging takeaways, with Chancellor Rishi Sunak noting that the economy is expected to return to pre-COVID levels by the middle of next year. This will be six months earlier than previously thought. While business support measures like the furlough scheme have been extended to help businesses reopen post-lockdown, so too have a number of personal measures. The Budget 2021 was particularly positive for the property market, with the SDLT holiday extended and the announcement of a new mortgage guarantee scheme.
SDLT holiday extended
In a bid to “turn generation rent into generation buy”, the Chancellor announced that the stamp duty holiday on properties worth up to £500,000 will be extended from the end of March until the end of June. After that, there will still be no duty on homes worth up to £250,000 until the end of September. The threshold will return to the usual level of £125,000 from October 2021.
This will no doubt ease the pressure for those who were not in the position to move house last year. The extension provides a bit of breathing space for people who are considering putting their house on the market and means many more people can still benefit from the potentially huge savings that the stamp duty holiday provides.
Mortgage guarantee scheme
The Chancellor also revealed a new mortgage guarantee scheme in the Budget 2021 that aims to enable all UK homebuyers to secure a mortgage up to £600,000 with a 5% deposit. As part of the scheme, lenders who provide mortgages to homebuyers who can only afford a small deposit will benefit from a government guarantee on those mortgages. The Chancellor stated that some of the country’s biggest lenders will be offering 95% mortgages from next month. More will likely follow shortly after.
Making 95% mortgages available again is hugely beneficial for both first time buyers and home movers; it provides more options of lenders who are willing to lend to them. At George Square Financial Management, we have access to whole of market products. This means we can secure mortgage deals with high street lenders and specialist lenders. Please do get in touch to find out how our specialist mortgage advisers can help you to take advantage of the government guarantee scheme, as well as the stamp duty holiday.
Rebuilding the economy
Following the extraordinary year of economic hardship we’ve been faced with as a result of the pandemic, there is no doubt that the housing sector will play a key part in rebuilding Britain’s public finances. We feel optimistic that the stamp duty holiday extension, combined with the new mortgage guarantee scheme, will be effective in encouraging momentum in the property market, and will get the UK moving again. Moreover, the measures will help more of the nation’s first-time buyers to get a foot on the property ladder.