Back to the blogs list

Budget reaction: what do London buyers and sellers need to know?

Budget reaction: what do London buyers and sellers need to know?

Budget reaction: what do London buyers and sellers need to know?

As the dust settles on Rishi Sunak's second Budget as Chancellor, there is plenty for property buyers, sellers and landlords to consider.

When it comes to the housing market, the headline news is that the stamp duty holiday has been extended, while prospective buyers will be pleased with the announcement of a new 95% mortgage guarantee scheme.

There was also speculation that Sunak would use the Budget to reform property tax, such as Capital Gains Tax, in a bid to close the pandemic spending gap. Although this did not come to pass, details of future tax changes are expected to be released later this month, with new measures potentially introduced by the autumn.

Alongside the two key housing measures, the Chancellor announced additional support in light of the Covid-19 pandemic, including an extension to the furlough scheme and business rates relief.

Here at Ideal Locations, we've taken a closer look at the main policies affecting buyers and sellers in East London and Essex, providing an overview of everything you need to know...

Stamp duty holiday extension confirmed - what are the details?

After much speculation and a long campaign from estate agents, consumers and politicians, it has been confirmed that the stamp duty holiday has been extended.

The tax break, which was due to end on March 31, will continue in its current form until June 30. This means buyers of properties worth up to £500,000 will still be exempt from paying stamp duty.

From July 1, the stamp duty threshold is being reduced to £250,000, meaning only those purchasing cheaper properties will be exempt from stamp duty. However, there will still be savings of up to £2,500 for all buyers.

Following the extended stamp duty holiday, the pre-pandemic threshold of £125,000 will return. This means that property purchases will once more only be exempt from stamp duty on the first £125,000.

Research from Rightmove suggests that the three-month extension of the holiday on the first £500,000 of purchases will see an additional 300,000 transactions complete, saving buyers a combined £1.75 billion.

Meanwhile, when the threshold is reduced to £250,000 from July, around 45% of properties will still be eligible for stamp duty savings.

Will the stamp duty holiday extension boost the market?

The extension of the stamp duty holiday will help to remove uncertainty from the market and sustain housing market activity for the remainder of the year.

There were concerns that following the March deadline, demand for homes could drop-off significantly while thousands of purchasers would miss out on huge savings.

The new dates provide buyers already in a transaction with more time to complete, while those thinking about buying can still benefit from a reduced stamp duty bill all the way up until September.

According to Rightmove, traffic to its website surged by 16% immediately after the Chancellor's address, demonstrating the boost the news has provided.

This is positive for sellers as it means the chances of existing transactions falling through are reduced, while demand is likely to remain high over the coming months.

With this in mind, it remains a great time to sell a property in East London or Essex, with good prospects of selling quickly and for the best possible price.

New 95% mortgage scheme to help buyers with lower deposits

As well as the extension to the stamp duty holiday, Rishi Sunak announced the details of a new 95% mortgage guarantee scheme which will provide further incentive for property buyers.

The scheme, set to launch next month, will be available to all buyers and will not be restricted to new-build homes. It will be available for buyers purchasing homes valued up to £600,000.

How will it work? Well, the government has said it will provide mortgage lenders with incentives to provide 95% mortgages, which have become less common as a result of the pandemic.

By taking on some of the risk of lower-deposit lending, the government is hoping to allow buyers to purchase a property with a deposit of just 5%. This is significantly lower than the 10% or 15% currently required by the majority of lenders.

Several major lenders are already on board, including Lloyds, Barclays, NatWest and Santander. You can read more on the government website here.

Another measure to sustain housing market activity

The announcement of the 95% mortgage guarantee scheme also encouraged an immediate boost for property buyers. According to Rightmove, traffic to its mortgage calculator increased by 25% as a result of the announcement.

Much like the extension of the stamp duty holiday, the mortgage guarantee scheme will provide positive buying conditions and encourage more people to consider their purchasing options.

With more buyers in the market, sellers can benefit from high demand and lots of interest in their properties. Consequently, this paves the way for a quick, hassle-free sale.

The Chancellor's Budget policies have helped to provide the property market with a further boost and allay concerns that activity will drop-off later this year.

As they have been for some time now, buying and selling conditions are favourable so if you're thinking about entering the market, now is the time to act.

If you require further guidance on the stamp duty holiday, 95% mortgages or any part of the home moving process, please contact us today and our team would be delighted to help.

We also offer a free instant online valuation to give you an estimate on how much your home could be worth on the current market.

Comments


x