Published: 04/03/2021In one of the most eagerly anticipated budgets for a number of years, Chancellor Rishi Sunak announced good news for the property industry by extending the stamp duty holiday for house buyers for a further three months until the end of June 2021.
Purchases up to £500,000 will continue to be free from the tax until this date – with homes bought up to a value of £250,000 being extended even further to the end of September 2021. Sunak announced on 3rd March “To smooth the transition back to normal, the nil rate band will be £250,000, double its standard level, until the end of September – and we will only return to the usual level of £125,000 from 1 October.”
This news will be a huge relief to the industry as a whole, with widespread worry around the 160,000 home sales stuck in limbo and at risk of falling through if the holiday period was not extended. It is thought that the three-month extension is costing an estimated £1bn, adding to the £271bn the government has already borrowed this financial year to deal with Coronavirus.
The Chancellor also confirmed a new scheme to provide mortgages to homebuyers who put forward only a 5 per cent deposit, encouraging banks to lend to those with smaller savings pots. The government will take on some of the loan risk in the form of a state guarantee.
“A policy that gives people who can’t afford a big deposit the chance to buy their own home,” he told MPs. “As the prime minister has said, we want to turn generation rent into generation buy.”
It was confirmed that the Government would back the loans, which will be available on homes costing up to £600,000. Banks and building societies are not obliged to offer the mortgages, but Sunak said in his speech that several have already committed to do so. The scheme will begin in April and will be available on new mortgages taken out until 31 December 2022.
The number of people owning property under the age of 40 has plummeted over the years as young people face rising rent costs along with soaring house prices. It is hoped that with the new 5% deposit mortgages back on the table, that more people are able to afford these smaller deposit amounts required in order to buy a home.