In good news for home sellers and prospective buyers, the 2021 Budget will have a positive effect on all sectors of the housing market. The government’s ambition to turn “generation rent” into “generation buy” has led to targeted aid to first time buyers, acknowledging that saving up for a deposit and getting on the property ladder is harder than ever as a result of the pandemic. It’s not just first time buyers who will benefit from today’s announcements either.
These are the key property take outs from today’s Budget:
Stamp duty holiday extended to the end of June
The stamp duty holiday not only propped up the housing market at the start of the pandemic, it also drove up the average value of a home by 8.5% in 2020. The much anticipated extension of the stamp duty holiday boosted house prices by 0.7%
in February and average home values hit a record high of £231,061, up 6.9% on last year, according to Nationwide building society. Rightmove estimates that this three-month extension to the scheme will benefit an additional 300,000 sales in England. This extension acknowledges that parts of the sales process have become overwhelmed with unprecedented demand for conveyancers, lenders and surveyors. Sellers of homes under £500,000 now have a fighting chance of completing their property sale in time to avoid paying any stamp duty. Then to smooth the transition the nil rate band will be increased from £125,000 to £250,000 from 1 July until the end of September.
New 5% Mortgage guarantee scheme
In an attempt to turn “generation rent” into “generation buy”, first-time buyers will now be able to secure a mortgage from many of the major high street banks with a deposit of just 5% of the value of the property. The new mortgage scheme will launch in April and is not purely restricted to first time buyers or new build homes, but there is a £600,000 limit. In a market long dominated by wealthier buyers, tens of thousands of young people will now be guaranteed part of their loan by the Treasury in an attempt to encourage banks to offer riskier mortgages. Most banks stopped offering the 95% mortgages early last year because of the pandemic. The new scheme will replace the Help to Buy scheme created in 2013, which lasted until 2017.
House prices stable and set to rise
Industry analysts agree that the 5% mortgage offer and the stamp duty extension will fuel property demand and push up house prices. Lenders can be confident that if the government is effectively taking a stake in the market, they won’t want prices to crash. A healthy housing market relies on first time buyer activity and the 5% mortgage guarantee scheme will enable plenty of buyers to get their foot on the first rung of the property ladder.
If you’re thinking of selling your home this Spring, why not get in touch? Our team here at Mustard would love to take the hassle out of your home move. Why not get the ball rolling by booking a free property valuation with us now.
And if you’re hoping to buy in the Milton Keynes and Towcester area we’d love to help you find your next home. Why not join the growing number of sellers and buyers who are choosing to move with Mustard?