There was some nervousness amongst the housing industry ahead of the 2021 UK Budget delivered by Chancellor Rishi Sunak. Nervousness that soon turned into relief amongst buyers, sellers and the industry as a whole, as a three-month extension to the stamp duty holiday for all homes up to the value of £500,000 was announced, followed by a less anticipated further extension until September for all homes up to the value of £250,000.
Further to this, first-time buyers may welcome the move by the Government to introduce a 5% deposit guarantee, who noted that banks such as Natwest, Lloyds, Santander, Barclays and HSBC were already poised to offer 95% mortgages from next month.
Jonathan Richards, SevenHomes’ managing director comments: “Today’s Budget is welcome news for housebuilders and homebuyers alike. Firstly, the extension of the stamp duty holiday will be a relief to many buyers and sellers worried about missing the previously announced deadline. This also means the UK can avoid any major collapse in transactions as was previously the concern.
“The further extension until September for properties up to the value of £250,000 is also a very welcome – and unexpected, move that will allow a more phased return to the standard threshold of £125,000. With the average value of homes in the midlands and north of England, along with Scotland, Wales and Northern Ireland, sitting at below £250,000, this will certainly go a long way in helping to maintain – even boost – transaction levels over the next six months.
“The Chancellor’s confirmation of a mortgage guarantee for buyers with just a 5% deposit will also be a welcome move in helping more people on the ladder. Although there are waves of concern across the industry that this might push up house prices further, pushing them further out of reach for first time buyers, along with questions of affordability, there are many who will welcome this move with open arms.
“We must remember that there are many cases where mortgage affordability among first time buyers isn’t the problem, because they’re already paying a higher premium on rent than they would on a mortgage. It’s raising the deposit that is the issue.”