One of the most anticipated budgets in recent history was deliver by Chancellor of the Exchequer Rishi Sunak yesterday. While much of the attention was on the measures designed to help people through the COVID-19 pandemic, there were some other interesting elements that people should take note of.
In terms of London, there are a few Budget decisions that will have an impact on the pockets of local people – with an effect on the local housing market too. With the average salary in London topping £38,000, freezing the personal allowances on income tax will take away some disposable income. Keep an eye out for this if you’re looking for a mortgage or remortgage for your London home. It will affect affordability – more on mortgages later. A £20 rise in Universal Credit payments doesn’t add up to a lot when living in the capital.
For his part, the London Mayor Sadiq Khan said that the Budget takes London’s recovery for granted. And he’s not the only person who feels that the government’s ‘levelling up’ policy for the rest of the country can sometimes seem like it is more like ‘levelling down’ London instead of providing a boost for the rest of the UK’s economy.
Stamp Duty Land Tax
One of the most hotly debated topics with our clients in London is Stamp Duty. And there was some good news delivered her by Rishi Sunak. Of course, the London housing market is its own beast in terms of Stamp Duty. The Stamp Duty holiday for homes under £500,000 has been extended to the end of June. This is welcome relief for people who feel like they were maybe going to miss out on the holiday. It’s true that many potential buyers have been put off viewing homes under pandemic restrictions. But the number of people who have been vaccinated and virtual viewings are among the things that have persuaded people to come back to the housing market. Extending this Stamp Duty holiday will reward potential buyers who are looking to make the move now.
And The holiday for properties under £250,000 has also been extended – this one until the end of September. Again, this brings some hope to the housing market, with pent up demand starting to be released. This doesn’t apply to many properties in London, but bear it in mind if you’re selling up here and buying elsewhere in the UK.
As it stands, from 1st October 2021, the pre-COVID Stamp Duty rates will be reintroduced.
Help To Buy
One of the successes of recent years in trying to address the issues getting on the property ladder has been the Help Top Buy schemes the government has tolled out. Sunak yesterday announced the latest instalment in these schemes.
The headlines talk about 95% mortgages. But, as you’d expect, there’s more detail behind those headlines. When the coronavirus pandemic hit, one of the fist things lenders did was pull all of their low deposit mortgage deals. It was a reaction to a potential fall in the housing market. While it’s true to say that they were protecting against predicted falls in house prices, it’s also fair to say that this didn’t materialise on the scale predicted.
In the meantime, we’ve seen no appetite at all from lenders to reinstate these deals. Hence the government has stepped in. No doubt there has been much conversation between the government, Bank of England and the lenders on this behind the scenes. The result is a 95% mortgage backed by the government.
Here’s how it works in London -
The average first time buyer in London buys a home for just under half a million. With a 5% deposit, they have to come up with around £25k., rather than double that for a 90% mortgage. Obviously, this is a significant sum. It’s available on properties up to £600,000, is available until the end of 2022 and will be offered by some of the biggest lenders. Speak to us about the availability of these mortgages and we’ll help you on the right track.
The Housing Market
Rightmove reported record traffic on their website in the immediate aftermath of the announcements in the budget, with London estate agents registering a similar increase in activity. This doesn’t necessarily mean that the London property market is overheating but warming up nicely after what has been a tough year. With the trends to leave cities and head for the countryside, seaside and other remote locations being a major feature of the 2020 housing market, 2021 looks like people are warming up to living in London again as the total people who have received the vaccine in the UK to date passing the 20 million mark.
Written by John Rigg
Source London Estates
