There was positive news for homebuyers announced in the UK Budget on Wednesday 3rd March 2021 – an extension to the Stamp Duty holiday and a return of 5% mortgages.

The Chancellor of the Exchequer, Rishi Sunak announced the extra taxation ‘holiday’ as part of ongoing plans to buoy the economy and to help homebuyers during the continuing coronavirus pandemic.

Last July the UK Government exempted most homebuyers from paying the fee, removing completely the threshold where you start paying the ‘tax’ in England and Northern Ireland from £125,000 (or £300,000 for first-time buyers) to zero on properties under £500,000.

The new extension, proposed for at least three more months until the end of June, will see a continuation of zero cost stamp duty paid on properties in England under £500,000 and could save the average homebuyer around £4,500 - even as much as £10,000 on higher valued homes. It will also help people who were buying homes, due in part to the Stamp Duty holiday, but faced delays that could have seen them fail to complete by the original 31 March deadline.

A person holding up a cardboard cut out of a house in a field while the sun shines through the cutout

The temporary measure, which runs until the end of the first quarter of the 2021/2022 financial year, could benefit 90% of people looking to get onto or move up the property ladder. The Chancellor also announced a phased return to the original stamp duty levels; to help smooth the transition Stamp Duty will be exempt on properties under £250,000 until the end of September, finally returning to the usual level of paying tax on properties over £125,000 from October 1st.

Meanwhile, the Chancellor also officially announced the Mortgage Guarantee programme, which give homebuyers the opportunity to apply for 95% mortgages meaning that they will only need to find a 5% deposit. The Chancellor announced that many lenders had already signalled that they would be offering these mortgages from April 2021.

The low deposit mortgages all but disappeared during the pandemic, with some lenders concerned about repayments during uncertain times, however the Government will now offer some guarantees to lenders, reducing the risk. They will offer incentives to lenders to allow those with 5% deposits to get on to the property ladder, with lenders able to purchase Government guarantees that compensates them for a portion of their losses in the event of foreclosure. All lenders under the Mortgage Guarantee scheme will offer mortgages fixed for at least five years.

The scheme is not limited to first-time buyers, and is eligible for properties that are worth up to £600,000.

Initially applications for the Mortgage Guarantee scheme will run from April 2021 to December 2022 however Government will review this with an option to extend. To be eligible a mortgage under this scheme must; be for a residential mortgage (not second homes) and not buy-to-let, be on a property in the UK with a purchase value of £600,000 or less, be a repayment mortgage and not interest-only, have a loan-to-value of between 91 per cent and 95 per cent and must meet standard requirements in terms of the assessment of the borrower’s ability to pay the mortgage e.g. a loan-to-income and credit score test. You can read more details here.

Beech Grove Homes Budget 2021 article teaser

At Beech Grove Homes we want to help you make that move!

We have a section here on our website called Buying Advice which contains information on Stamp Duty and other helpful advice when it comes to finding your new home. You’ll find that tab at the top of this screen.

To take advantage of the extended Stamp Duty holiday and guaranteed mortgage programme, you can search our extensive properties for sale here online by searching our Beech Grove Homes developments. Alternatively if you would like to discuss buying a new home with us you can get in touch with our expert Sales Executives via our Contact Us page.
For more information on Stamp Duty you can visit the Government website.

 

- The Beech Grove Homes / Sanctuary Homes team

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