Budget 2021 Summary

Published on Mar 03, 2021 by Lesley Price on Conveyancing

Following the Chancellors budget today we provide a summary of the provisions being put in place to assist the Housing Market and boost buyer confidence

A mortgage guarantee scheme to help people with small deposits get on the property ladder 

The government will offer incentives to lenders, bringing back 95% mortgages which have “virtually disappeared” during the pandemic, the Treasury says. Chancellor Rishi Sunak says public finances are facing a “challenge” from the pandemic’s impact on the economy.

The availability of a higher Loan to Value should help open the housing market to more first time buyers who want to make an open purchase rather than through Help to Buy or a shared ownership scheme.

The new mortgage scheme is not restricted to first-time buyers or new-build homes, but there will be a £600,000 limit.

The coronavirus pandemic has meant there are now few low-deposit mortgages available, the Treasury said, with just eight on the market in January.

They are often seen as riskier by banks as they are more vulnerable to negative changes in property prices - meaning people hold more debt than their home is worth.

Under the scheme, which will launch across the UK in April, the government will offer to take on some of this risk. A number of high street lenders including Lloyds and Santander have agreed to provide mortgages under the scheme from next month. More lenders are expected to follow suit in the coming weeks.

The chancellor has agreed and extension to the Stamp Duty ‘Holiday’ on properties up to £500,000until 30th June 2021

Whilst many in the Conveyancing profession may argue the extension has been announced to late to prevent the build up of transactions at the end of March this will be welcome news to many buyers whose completions are likely to miss the original deadline of 31st March due to delays caused by Covid 19 restrictions or build delays.

It is anticipated that as so many buyers have already committed to or prepared for the end of March that this will still be a record month for conveyancing transactions but the extension of the scheme will allow those to profit from the discount who would otherwise have lost out.

Often through delays which are outside of their or their conveyancers control.

The planned uplift to the basic rate of SDLT to £250,000.00 the 1st October will help smooth the transitional period after the holiday for many buying at the lower end of the property value scale but falls short of the abolition of Stamp Duty that had been called for by a number of industry groups.

It is hoped however the extension will also keep the market buoyant as the Country moves out of lockdown and see it through to the traditionally more busy summer period.

The property market should further be assisted by the Chancellors measures to maintain the jobs Market

The Furlough scheme is to be extended until the end of September but employer contributions are to increase from July.

Mr Sunak has repeatedly announced end dates to the coronavirus job retention scheme, only to extend it before it expires. It had been anticipated that he would extend the scheme to the end of June – to align with when coronavirus restrictions are set to be lifted.

Furloughed employees would continue to receive 80% of their current salary, capped at £2,500 a month until the scheme ends. Employers will be asked for a contribution of 10% from July and 20% in August and September towards the hours their staff do not work.  

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