The housing market is dependant upon confidence; confidence is underpinned by a strong and growing economy.
The Chancellor of the Exchequer’s Budget announced on the 3rd March contained a number of important and significant statements and policies which will bring some encouraging comfort for the housing market. None more so than the forecast from the Office for Budget Responsibility which predicted a substantial rise in economic growth for the UK over the next 3 years. This represents a solid foundation for the housing market for at least this period of time, but more likely for a little while longer.
Among the more important headline announcements was that the government will extend the temporary increase to the SDLT nil rate band, £500,000, for residential property to 30 June 2021. From 1 July 2021 until 30 September 2021, the nil rate band will be £250,000. The nil rate band will return to the standard amount of £125,000 from 1 October 2021.
Clearly, this will take the extreme pressure out of the countdown to the end of March when we were facing the dire prospect of a cliff edge, do or die, race for many purchasers. The wisdom in tapering off this extension after the first 3 month holiday will greatly assist in shallowing out the sudden drop that could have faced the industry.
The government will introduce a new mortgage guarantee scheme in April 2021. This scheme will provide a guarantee to lenders across the UK who offer mortgages to people with a deposit of 5% on homes with a value of up to £600,000. Under the scheme, all buyers will have the opportunity to fix their initial mortgage interest rate for at least five years should they wish to. The scheme, which will be available for new mortgages up to 31 December 2022, is designed to increase the availability of mortgages on new or existing properties for those with small deposits. The aim of the government being to turn “Generation rent into generation buy”.
Sometimes, what is not said can be as revealing as what is actually stated. It was, in some quarters, anticipated that the Chancellor would make some changes to the Capital Gains Tax arrangements. However, this was not forthcoming. This silence bodes well for property investors and those who might have needed to dispose of a taxable asset in the near future.
To draw a conclusion, I think it would be fair to say that was some good news for the housing market and probably no bad news. This is something that, we in in the housing industry, will be satisfied with. There remains an active housing market and with the spring surge in new instructions about to hit the market. If you are thinking of moving home anytime within the next year or so, this next period of time probably represents as good a time as any to do so.
Don’t delay, don’t miss this ideal opportunity. The next Budget might not be so kind to the housing market.