2021 Budget: Housing and Property Market Update

Investment News
3 Mar 2021
2 min read
Investment News

2021 Budget: Housing and Property Market Update

3 Mar 2021
2 min read

It is no surprise that the 2021 Budget contained ways for the government to find ways to repay the record £270 billion the UK borrowed to keep the economy going throughout the pandemic. 

 Today (3 March), Chancellor Rishi Sunak unveiled a range of new measures including changes that will affect the property market.

In this 2021 Budget feature, Town Square Invest looks at how the announcements will affect the housing industry and what measures are in place to keep the property market moving.

What is the next Stamp Duty holiday extension date?

 The government’s Stamp Duty holiday has been extended to 30th June 2021 from 31st March. The extension is good news for the property industry and buyers alike and will help to buy to let investors make significant savings on property investments. 

Stamp Duty holiday rates:

The current Stamp Duty Land Tax (SDLT) threshold for residential properties is £500,000. This changes on 1 July 2021.

The threshold for non-residential land and properties is £150,000.

Property purchases from 1 July 2021 to 30 September 2021

The SDLT thresholds will be:

  • £250,000 for residential properties
  • £150,000 for non-residential land and properties

The threshold for residential properties will change on 1 October 2021.

Source: UK Government.

Follow the link to find out more information about Stamp Duty holiday tax brackets.

What is the 95% mortgage guarantee scheme?

 During his 2021 Budget speech, the Chancellor backed a 95% mortgage guarantee scheme to make buying a house more affordable for first-time buyers. He described the scheme as “a policy who gives people who can’t afford a big deposit the chance to buy their own home”.

The Prime Minister described the effort as a roadmap to make “generation rent to become generation buy”, the new 95% LTV mortgages will be available to all buyers and not just first-time buyers.

Buyers should note that the 95% mortgage scheme will only be available on properties that cost up to £600,000. It is also not restricted to new-build homes. As will all property purchases, individuals are encouraged to seek independent financial advice to ensure long-term affordability.

What does this mean for the rental market?

 The Stamp Duty holiday extension and the introduction of 95% LTV mortgages will be news that is welcomed by many would-be first-time buyers however, it does not mark the end of the rental market.

Many renters are unable to save money for deposits and the steps that have been put into place to help first-time buyers to get on the property ladder will ultimately inflate prices.

The UK’s housing industry is widely undersupplied. The government and housebuilders have been unable to keep up with the demand for new-build housing for decades. This undersupply of housing has been one driver of UK property prices, with values now at a record-high.

For buy-to-let landlords and investors, the UK’s property market continues to provide plenty of potential, and with the Stamp Duty holiday extended by 3 months, now is a great time to make the most of tax savings.