Last Wednesday, Chancellor Rishi Sunak delivered his highly-anticipated Spring Budget for 2021, and as a follow up to our prior article we thought we’d break down what was announced and how it will affect the property market!
After an incredibly turbulent 12 months, many waited eagerly to see what the Chancellor would announce in response to the ongoing COVID-19 pandemic. Many anticipated extra financial support for both individuals and businesses affected by the pandemic, as well as the introduction of measures to support the UK’s long-term economic recovery. As for the property market, there was a lot of talk regarding an extension of the Stamp Duty Holiday, despite the chancellor continuously denying it in the months prior. With all these rumours swirling around about what we can and can’t expect from the budget, what was announced exactly?
COVID-19 support
One of the biggest announcements on the day was the extension of the Government’s furlough scheme until the end of September, with the Government continuing to pay 80% of employees’ wages for hours they are unable to work up until the end of June. Employers will be asked to contribute 10% in July and 20% in both August and September. Support for the self-employed has also been extended until the end of September – with 600,000 more self-employed people set to be eligible for help as access to grants was widened.
Additional support measures were also put in place during the budget include the extension of the £20 weekly uplift in Universal Credit (worth £1,000 a year) for another six months; the announcement that Working Tax Credit Claimants will get £500 one-off payment and the increase of the minimum wage to £8.91 an hour from April.
UK Economy
All of these measures will hopefully aid in the recovery of the UK’s economy. During the course of 2020, the UK economy shrank by around 10%, with a number of jobs lost and businesses unfortunately having to close. 2021 is already look more positive however, with the economy forecast to rebound through the year with a predicted annual growth of 4%. By the middle of 2022, it is expected that the economy will return to pre-Covid levels, with a growth of 7.3% next year.
Despite a dismal 2020, the future for the UK economy looks increasingly positive thanks to an expected swift and sustained recovery.
Property Market
On top of the numerous economic and personal changes announced last week, there were a number of announcements in regard to the UK property market. Without a doubt the most significant announcement was the stamp duty holiday extension.
For a long time, it looked extremely unlikely that the Chancellor would budge from the original deadline of March 31st for the stamp duty holiday, however in a drastic turn of events the deadline was pushed back until the end of June. The extension is set to benefit an additional 300,000 property transactions according to property portal Rightmove, with buyer potentially saving a cumulative £1.75bn.
Following the deadline, the rates will stand at the following for buy-to-let properties: 3% between £0-£125,000; 5% between £125,001-£250,000; 8% between £250,001-£925,000; 13% between £925,001-£1.5m; and 15% for £1.5m+.
Although slightly overshadowed by the stamp duty holiday extension, a brand-new mortgage guarantee scheme for the property market was also announced. The scheme has been created to help homebuyers with 5% deposits secure mortgages, supporting buyers who have smaller deposits when looking to purchase a property worth up to £600,000. The Government are set to back portions of the mortgages in an attempt to entice lenders to get involved, and Rishi Sunak claimed that many of the UK’s leading lenders have already agreed to offer mortgages through the scheme from April.
The UK property market has already proved its resilience over the course of the pandemic, and now as we look to a pandemic-free future, the market’s growth is only set to continue. The measures announced in the budget the address the short-term economy will pave the way for a quick recovery for the UK and hopefully long-lasting prosperity.
