Although some key elements of this week’s Budget had been revealed to the press in advance, many were still waiting to see what the detail of Rishi Sunak’s spending and taxation plans would mean for the property sector.
Confirmation of an extension of the stamp duty holiday
Key news, of course, was the extension of the stamp duty holiday, which will now continue until the end of June. After that the nil rate band will be set at £250,000 – double its standard level – until the end of September.
As reported by the BBC, Rishi Sunak told MPs the extra move was
“to smooth the transition back to normal – and we will only return to the usual level of £125,000 from October 1”.
The stamp duty holiday was introduced to help buyers who might have taken a financial hit because of Covid. It was also intended to boost a property market hit by lockdown.
New 5% mortgages to help more people onto the housing ladder
Back in September, Advantage wrote about the shortage of mortgages available for those with lower deposits, noting that The Times stated that there were 1,172 mortgage deals for those with a deposit of 10% or less in September 2019 compared with 76 a year later, according to the financial information firm Moneyfacts.
In a bid to tackle this issue, people will now be able to buy homes with a deposit of 5% under a new scheme announced by the Chancellor. As reported by The Metro, it’s hoped the ‘mortgage guarantees’ will help current homeowners as well as first-time buyers looking to buy a house worth up to £600,000.
Like the stamp duty holiday extension, the policy had been widely trailed in advance of the Budget but Rishi Sunak has announced more details in the Commons, telling MPs:
“Lenders who provide mortgages to homebuyers who can only afford a 5% deposit will benefit from a Government guarantee on those mortgages.”
“I’m pleased to say that several of the country’s largest lenders including Lloyds, NatWest, Santander, Barclays and HSBC will be offering these 95% mortgages from next month, and I know more, including Virgin Money will follow shortly after.”
Extension of the furlough scheme & a new National Infrastructure Bank
The Chancellor has also announced plans to launch a new National Infrastructure Bank to finance schemes and play a part in helping the UK reach its net-zero carbon targets.
The new bank, which will be based in Leeds, will be established to boost investment and accelerate progress to net-zero carbon, which the chancellor stated would be a “green industrial revolution”.
Mark Reynolds, group chief executive of Mace, was quoted by PBC Today, stating:
“It is clear that the chancellor recognises the huge importance of maintaining jobs and continuing to support investment in housing and infrastructure to deliver the growth we desperately need.
“The extension of the furlough scheme will be welcomed by many in the industry, as will additional support for employers taking on apprentices – and the package for the new National Infrastructure Bank makes clear the scale of the Treasury’s ambitions. Alongside investment in new Freeports, such as Teesport, and the Green Investment Bond, there are very positive signs here for our industry – but what matters now is how and when these ambitions will be realised at pace.
“If the National Infrastructure Bank is to succeed, funds need to move quickly; we must focus on ensuring that it is empowered to drive real change in our industry; promoting fairer procurement and innovative approaches to funding and delivery, prioritising ‘shovel-worthy’ schemes that create sustainable local jobs, reduce carbon emissions and create better outcomes for everyone.”
Helping those on lower incomes who want to own their own home
Fiona Fletcher-Smith, chief executive of L&Q, said:
“The housing sector will play a vital role in rebuilding and levelling up Britain’s economy after the pandemic, and we are delighted to see the government acknowledge this in today’s Budget.
“L&Q provides housing of all tenures for people on a range of incomes. As a charitable organisation our priority will always be social rented housing, but we fully appreciate that many people aspire to homeownership. Today’s announcements about the mortgage guarantee scheme and extending the stamp duty ‘holiday’ are very welcome.”
Advantage’s view: Working with leading developers, individual housebuilders and Housing Associations to supply structural warranties for their projects, we’ve seen first-hand the determination of those within the construction industry, be they self-builders or businesses working on £50m plus projects, to keep on building safely in challenging times.
We know that many leading voices within the sector have been calling for an extension to the stamp duty holiday and for more help from government to give “generation rent” a route onto the housing ladder. Confirmation of the stamp duty extension will be welcome news for those who are already home-owners, or are preparing to buy a home, while The Mortgage Guarantee Scheme is likely to help those who would otherwise have struggled to raise a 10% deposit to get onto the housing ladder.
The extension to the furlough scheme will also help many employers within the construction industry and we’ll be watching the launch of the National Infrastructure Bank with interest.
Do you require a structural warranty for your project? The AHCI team is proud to work with clients on developments throughout the UK, adhering to all social distancing guidelines to ensure that projects are covered by the appropriate structural warranty. To find out more, call: 0845 900 3969 or email: firstname.lastname@example.org