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What the 2021 Budget means for you

Written by Redrow

4 Mar 2021

After weeks of speculation, Chancellor Rishi Sunak unveiled his Budget on Wednesday, setting out the state of the economy and his financial plans.

His announcements will come as welcome news to first-time buyers, second steppers and downsizers alike, as it was revealed that the current stamp duty holiday will be in place for another three months and that there will be a “government guarantee” on 5% deposits to help get more people onto the property ladder.

We explain these new policies – and what they mean for you – in more detail below. 

You can still benefit from the government’s stamp duty holiday

In an effort to get the property market moving again post-lockdown, in July the chancellor announced a stamp duty holiday, which meant that buyers would not have to pay any stamp duty on the first £500,000 of their property purchase in England and Northern Ireland. 

This tax break was due to finish at the end of March. However, due to delays in the lending and conveyancing process caused by a surge in demand as successive lockdowns prompted more home moves, thousands were at risk of missing out on the relief that they budgeted for. 

To stop these transactions from falling through, the Chancellor has now extended the stamp duty holiday to June 30th. 

After that, the relief will taper off. From July to September, no stamp duty will be paid on the first £250,000 of a purchase. From the start of October, stamp duty will return to its pre-pandemic level of £125,000.

So, what does this mean for you?

For those already in the home buying process and worried about not meeting the initial March deadline, the pressure is off. You still have a number of weeks to finalise your purchase. 

If you’re only at the very initial stages of the home buying process, you may be in with a chance of benefiting from the tax relief, too. 

Buying a new build home means that there is no upward chain, so if you’re a first-time buyer, you can be ready to move into your new home as quickly as getting your personal finances in order allows. 

You can buy a home with a lower deposit

The government also announced a new 5% deposit home loan guarantee scheme, which will be available to current homeowners as well as first-time buyers looking to buy a house for up to £600,000 nationwide. 

The new products will be available from next month and should help those who have a steady income but have been unable to save for a deposit to buy their first home. 

A government-backed mortgage guarantee scheme will help first-time buyers get on the housing ladder at a time when, for many, owning a home seems an impossible dream. Buyers purchasing an average first-time buyer property in the UK (£200,692) will now only need just over £10,000 to buy their first home. 

The new scheme has piqued interest already, with Rightmove revealing that the use of its mortgage calculator jumped by 85% within half an hour of Sunak’s announcement. Several mainstream lenders have already signed up to the government’s scheme, including Lloyds, NatWest, Santander, Barclays, and HSBC, with more to follow in the coming months.

A Help to Buy reminder

While not a feature of today’s Budget, for first-time buyers of new build homes, it’s worth remembering that you can take advantage of the Help to Buy equity loan scheme to purchase a property. 

You’ll need only a 5% deposit, with the government lending you up to 20% of the value of your new home through an equity loan, interest-free for five years. This means securing just a 75% mortgage from a bank of building society. In London the higher property costs are reflected by a 40% equity loan being offered. Regional price caps on properties apply.

This scheme will run until March 2023. We are now able to start taking reservations using Help to Buy for homes completing after March 2021.

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The Coronavirus pandemic has forced many of us to re-think what we want from our home and where we want to live. Whether you have a desire to move to the country, city, or seaside, or are looking for a home office or a garden, now is the time to act and take advantage of the government incentives on offer. Start your home-buying journey here: www.redrow.co.uk