Stamp Duty Holiday
We heard in yesterday’s announcement that the stamp duty holiday has been extended for three months! Helping many home movers already in the process but cutting it fine for the deadline and those looking to start their home move journey to save thousands of pounds –great news!!
This means that the welcomed tax break will now end on the 30th of June. Following on from this date, the nil rate will reduce to £250,000 until the end of September whereby stamp duty will then resume to £125,000 as before the pandemic.
If the property purchased is your main home -and the sale is completed before 30 June -you won’t pay any stamp duty at all if it costs £500,000 or less.
The next portion of the property’s price (£500,001 to £925,000) will be taxed at 5%, and the £575,000 after that (£925,001 to £1.5m) at 10%.
However, Scotland and Wales are yet to announce if they are extending their temporary thresholds for Land and Buildings Transaction Tax or Land Transaction Tax from the end of March when they are due to resume the original thresholds.
How else is the Government planning on boosting the property market?
They have also announced a ‘mortgage guarantee scheme’ whereby buyers can secure a mortgage with just a 5% deposit. They expect this scheme to begin in April.
Due to the pandemic, we saw most lenders withdraw all of their mortgages offering a 10% and 5% deposit. Although, we have seen a reintroduction of 90% mortgages we are yet to see 95% mortgages make a return without limiting criteria e.g. family assisted.
We know at present, that the Help to Buy scheme allows buyers to facilitate a 5% deposit, so how is this different?
Unlike the Help to Buy scheme, the mortgage guarantee scheme is open to home movers as well as first-time buyers. The properties are not restricted to new builds and no loan is provided to yourself for which you will have to repay the Government.
Although, we are yet to understand what these products will look like until the product details are launched; it is anticipated that banks such as Lloyds, NatWest, Santander, Barclays, and HSBC will support the scheme.
Nevertheless, the housing market is remaining strong as we see a 6.9% annual house price growth in February reported by Nationwide and we hope that the above announcement will continue this trend throughout 2021.