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Stamp duty holiday extension and 95% mortgages – what do East Sussex movers need to know?

As part of his Budget address, Chancellor Rishi Sunak announced that the stamp duty holiday has been extended and a new 95% mortgage guarantee scheme is being introduced to provide a further boost for property buyers.

Unsurprisingly, the main focus of the Budget was the government’s ongoing support to tackle the pandemic, with the furlough scheme and business rates relief extended until the autumn.

There was some expectation that the Chancellor may use the Budget to announce reform of property taxes such as Capital Gains Tax, although this didn’t come to pass.

That said, there is a ‘tax day’ scheduled for March 23 in which consultations for property taxes to close the pandemic-related spending gap could be unveiled.

In the meantime, property buyers in Bexhill, Hastings and Eastbourne will be pleased to see that the stamp duty holiday has been extended.

Below is an overview of everything you need to know about the recent Budget.

 

Stamp duty holiday extension – what are the details?

Following a long campaign which resulted in a petition amassing over 150,000 signatures and a parliamentary debate, the stamp duty holiday has been extended.

The tax cut – which was scheduled to end on March 31 – will now run until June 30, meaning buyers of properties up to £500,000 can still benefit from significant savings.

From July 1, the stamp duty threshold will be lowered to £250,000 until September 30 2021. Therefore, stamp duty rates won’t return to the pre-pandemic threshold of £125,000 until October 1 2021.

Buyers whose transactions complete before the end of June can still benefit from savings of up to £15,000. However, those taking place between July and September will only be eligible for a maximum saving of £2,500.

It’s currently unclear whether either deadline will be tapered to prevent people from missing out on savings or whether the reduced extension until September is in fact the government’s attempt to phase out the stamp duty holiday without a cliff-edge or encouraging a drop-off in market activity.

 

How will the stamp duty boost impact the market?

Analysis from Rightmove suggests that the announcement of a stamp duty holiday extension provided the market with an instant boost.

Traffic to the portal surged by 16% and visitors to its mortgage calculator jumped by 25% in the immediate aftermath of the Budget.

It also suggests that 45% of all properties will be exempt from stamp duty in the July to September window when the threshold is reduced from £500,000 to £250,000.

Some 84% of buyer enquiries in England are for properties under £500,000, while 50% are for properties priced at £250,000 or below.

The extension of the tax cut means that thousands of buyers who would previously have missed out on stamp duty savings can now benefit, particularly if they complete before the end of June.

The news will provide the housing market with increased certainty, while sellers can now expect high levels of demand to be sustained throughout the spring and summer months.

However, there remains some concern about what will happen to buyers of properties priced over £250,000 who don’t complete before June 30 and those buying for less than £250,000 who don’t complete before September 30.

 

95% mortgage scheme – what do you need to know?

The other major housing policy announced by the Chancellor was the introduction of a 95% mortgage guarantee scheme from April.

The new scheme, which was first mooted by Boris Johnson last year, will help buyers of all properties priced up to £600,000.

In order to encourage lenders to reintroduce 95% mortgages – which virtually disappeared from the market as a result of the pandemic – the government will provide incentives and take on some of the risk.

Purchasers using the scheme will benefit from being able to buy a home with just a 5% deposit, in comparison to the 10% or 15% currently requested by the majority of lenders.

By providing further support to those looking to purchase properties, the new scheme will aim to help sustain housing demand levels. As a consequence, sellers’ chances of completing transactions quickly and for asking price or above will be vastly increased.

Full details of exactly how the scheme will work are yet to be provided, but you can see more information on the government website here.

Here at Oakfield Estate Agents, we will do all we can to help you sell your home successfully, and keep you updated with all the latest stamp duty announcements and what they mean for the market and your sale.

If you are buying and selling at the same time – as many do – you may also be interested to know how much you could save as a result of the stamp duty holiday.

For further information on how to manage the sales process, please get in touch with us today. You can also request a free instant online valuation to see how much your East Sussex property could be worth in the current marketplace.