On Wednesday, 3 March, Chancellor of the Exchequer, Rishi Sunak announced the Budget 2021 to MPs in the House of Commons.
The Budget is an annual statement made on ‘the nation’s finances and the Government’s proposals for changes to taxation’. It also involves economy forecasts for the year ahead and in the wake of the Covid-19 pandemic this year’s announcement was much-anticipated by business and taxpayers.
Below, we take a closer look at the implications the Budget 2021 will have on the property and housing market in the UK, as well as the potential benefits for homebuyers.
What does the Budget 2021 mean for the property sector?
- Mortgage guarantee scheme – from April 2021 until 31 December 2022, the government will provide a guarantee to lenders offering 95% mortgages on homes up to a value of £600,000. Buyers will also have the opportunity to fix their initial mortgage rate for at least five years.
- Extension to the Stamp Duty Land Tax holiday – the government will extend the existing increase in the residential SDLT nil rate band to £500,000 until 30 June 2021. There will also be a phased return to the usual £125,000 nil rate band by 1 October 2021.
- Change to Support for Mortgage Interest (SMI) for claimants moving home – the government will help SMI claimants in the UK to move home by adding legal costs associated with transferring their claim to a new property to the value of their loan from 15 March 2021.
- Bringing forward exemptions to the Shared Accommodation Rate (SAR) – from June 2021, care leavers up to the age of 25 and those under the age of 25 who have spent at least three months in a homeless hostel will be exempt from the SAR in Universal Credit and Housing Benefit, helping more vulnerable people access suitable housing. This measure has been brought forward from October 2023.
A comment from our Managing Director
Michael El-Kassir, Managing Director of GRE Assets, comments: “The extension to the Stamp Duty Land Tax holiday today is a positive step, especially for those undergoing property transactions, who were set to miss out due to the 31 March deadline.
“We’ve seen a sense of urgency from housebuyers when it comes to property transactions thanks to the existing SDLT holiday and the pent-up demand from earlier housing market constraints in 2020. There’s also been a shift in housing priorities, with increased interest in properties offering outdoor space, balconies and the provision to work from home. The extension to the holiday will ensure sustained activity within the market, which is promising.
“The mortgage guarantee scheme will be reassuring to first time buyers, who have failed to get on the housing ladder. The main challenge that this scheme, along with the extended stamp duty holiday, will pose, will be increased buyer demand outstripping housing supply.”
GRE Assets has been delivering high quality, well connected homes in the UK and Spain since 2006.