Budget update for the property market.
This year’s Budget was awaited with bated breath for those of us in the residential property sector.
Property lawyers, estate agents, surveyors and mortgage brokers have been tirelessly working to meet the 31 March deadline originally set for the end of the Stamp Duty Land Tax (SDLT) holiday.
In Wednesday’s Budget, the Chancellor announced that the nil rate band of £500,000 will now be extended until 30 June 2021.
This means no SDLT will be paid on the first £500,000 of the purchase price of a residential property. Buyers purchasing above this amount are currently benefiting from a £15,000 saving in SDLT. Whilst it has not been specified, this saving is understood to apply for both existing transactions and new transactions.
Unexpectedly, the Government has gone one step further and will be introducing a tapered approach from 1 July until 30 September 2021, where the nil rate band will be set at £250,000. This is double the usual threshold of £125,000 and will mean a maximum saving for buyers of £2,500. The tapering is hoped to reduce the ‘cliff edge’ buyers would face should their transactions not complete by 30 June 2021. The difference in saving from completing in June to July will remain sizeable at £12,500 and will therefore no doubt result in sustained market activity until 1 July 2021.
It should, however, be noted that the new 2% SDLT surcharge for non-UK resident buyers will still come into force on 1 April 2021.
Chancellor Rishi Sunak announced a further measure to stimulate the market by way of a Mortgage Guarantee Scheme which has been designed to increase the appetite of mortgage lenders for high loan-to-value (LTV) lending (i.e. 95% mortgages) for properties up to £600,000. The Scheme should essentially help open doors to more first time buyers and those homeowners that have low levels of equity in their current property, and overcome the hurdle of accumulating a sufficient deposit.
Whilst the extension of the SDLT holiday is a welcome announcement, buyers and sellers should not become complacent, and rather now is the time to take advantage of the biggest savings.
If you require any further information, please do not hesitate to contact us and we would be delighted to advise and assist.
Direct dial: 020 7201 3597 Email: ChloeDevallDouglas@childandchild.co.uk