What the Spring Budget means for property

Mar 8, 2021
Here’s how Chancellor Rishi Sunak’s announcements in the Spring Budget could impact the property market...

— STAMP DUTY HOLIDAY EXTENSION —  After much campaigning from the housing sector, the temporary stamp duty holiday has been extended by three months.

So, if you are buying a home up to the value of £500,000 you will not pay any stamp duty if the purchase is completed by 30 June 2021.

The rates will not return to ‘normal’ until 1st October 2021. Instead there will be an interim period until the end of September, when the nil rate is set at £250,000, before returning to the usual threshold of £125,000. This is welcome news to homebuyers and sellers fearful that their transactions could collapse if they were unable to complete their purchase by the previous deadline of 31st March.      — MORTGAGE GUARANTEE SCHEME —  Lenders have been withdrawing low-deposit mortgages for months now, make it harder for people to buy their first homes. To address this, the government has introduced a 95 per cent loan to value (LTV) mortgage guarantee scheme to help home buyers get on the property ladder.  Under the new scheme, which launches in April, mortgages up to £600,000 will be underwritten.   The government promises to underwrite 95% mortgage on properties with a value of up to £600,000. It is not restricted to first-time buyers or new-build homes, like the Help to Buy scheme, but prospective buyers must still have a regular income.     — TAX THRESHOLDS FROZEN —  A number of tax thresholds, including those for capital gains tax (CGT) and inheritance tax, will be frozen until April 2026.   The capital gains threshold will be held at £12,300 for the 2021/22 tax year and the threshold for inheritance tax will remain at £325,000.   Freezing CGT means anyone selling an investment property or a second home, will pay capital gains  of 28% on any equity since they purchased it, above £12,300. Couples who jointly own a property can combine their CGT allowance to £24,600.   Inheritance tax is paid at 40% on all assets worth more than £325,000 that are not left to a spouse or civil partner, although this threshold increases to £500,000 if you leave your home to your children or grandchildren.     — EXTENSION OF THE FURLOUGH SCHEME — Financial support for people whose jobs have been impacted by the pandemic, the scheme will be extended until the end of September. Employees will continue to receive 80% of their salary, although their employers will have to make a contribution towards this in August and September.   The self-employment income support scheme will also continue until the end of September with two grants equivalent to 80% of three months’ average trading profits, capped at £7,500.   This is good news for the market as it is less likely that people will fall into mortgage arrears and have their property repossessed, which will help support property values.  
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