Great news, property seekers! The Chancellor has announced an extension to the Stamp Duty holiday and has announced a plan to guarantee mortgages with 5% deposits, encouraging banks to lend to first time buyers or those struggling to save for a larger deposit.
Here’s everything you need to know!
Stamp Duty Extension
The Government has announced a three-month extension to the Stamp Duty holiday.
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a fee that anyone purchasing a house or land in England has to pay if their property is over £125,000 specified by the government. It can add a hefty sum to an already expensive process so having this 'holiday' has saved many buyers thousands of pounds in extra expenses. For instance, the stamp duty holiday on a property worth the full £500,000 would net you a saving of £15,000!
What is the ‘Stamp Duty holiday’?
As part of his summer statement, Chancellor Rishi Sunak, stated that the Government would be increasing the threshold on properties exempt from Stamp Duty fees up to the value of £500,000, meaning that many homes would be much more affordable for buyers across the country. This was expected to finish in March 2021.
The good news is the Stamp Duty holiday has been extended for a further three months meaning buyers purchasing a home up to the value of £500,000 will pay no Stamp Duty until 30th
June. Between 1st
July and 30th
September, this value will reduce to £250,000. The Stamp Duty threshold will then return to £125,000 for home buyers from 1st
Mortgage guarantee scheme
The Government has also announced a mortgage guarantee scheme that will encourage lenders to provide 5% mortgages to buyers looking to purchase a home up to the value of £600,000. The scheme will run from April 2021 and be available on new mortgages taken out until 31st
December 2022. Several major lenders including Lloyds, Barclays, NatWest, Santander and HSBC have already opted into the scheme.
How is this different to the Help to Buy equity loan?
The Help to Buy Equity Loan is a government backed scheme that is only available to help first time buyers. The scheme can only be used to purchase a home up to the value of £228,100 in Yorkshire and the Humber. The new mortgage guarantee scheme can be used for houses up to the value of £600,000.
If you'd like to chat about any of the new announcements and what this means for your home buying journey, get in touch with us!
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