The Housing Market 2021 – what to expect this year

The Housing Market 2021 – what to expect this year

Chancellor Rishi Sunak’s Budget delivery earlier this month was, as expected, heavily focused on getting the country back up and running following the last twelve months of the coronavirus pandemic.

Among the announcements included were key measures to support the housing market and the government’s goal of turning “generation rent” into “generation buy”. Many analysts look at the housing market as an indicator of the overall health of the economy. It was reported by Halifax that 2021 has seen a slightly softer start in terms of growth, with February seeing a 0.1% decrease on the previous month. Despite this, house prices are still in a strong position, with figures 5.2% higher than last February.

The Stamp Duty holiday continues

One of the key drivers for housing market growth seen over the last year is that of the Stamp Duty holiday. It was announced in this year’s Budget that this would be extended in England and Northern Ireland to help deal with the backlog of purchases that have built up due to the pandemic.

Benefitting investors and homebuyers, the tax-free allowance for the first £500,000 spent on a property will continue until 30 June. This gives a saving of up to £15,000. After this time, the threshold will drop to £250,000 until 30 September, with it then reverting to its normal level of £125,000. The separate first-time buyer threshold of £300,000 will return after June.

Wales’ Stamp Duty holiday of up to £250,000 has been extended until the end of June and Scotland’s temporary holiday on the same amount came to an end on 31st March.

New 95% mortgage initiative introduced

As well as an extension to the tax-free allowance, the government has also introduced a new 95% Mortgage Scheme. The aim is to increase the number of 95% loan-to-value (LTV) mortgages available to homebuyers. Data provided by Moneyfacts shows that there were five 95% LTV products available last month compared with 391 in March 2020.

The scheme will give banks and building societies a chance to buy a guarantee on the portion of the mortgage between 80% and 95%. This means that the government will cover that chunk of the lender’s losses should the borrower get into financial difficulty, thereby incentivising lenders to increase the amount up to 95% LTV products they currently offer. The initiative will start in April and run until the end of 2022.

Will the measures help to keep the housing market buoyant?

Following the 2008 financial crash, very high LTV mortgages have been rare to come by. This gave an indication into the fear that lenders had about house prices crashing. As the new 95% mortgage scheme is a government-backed initiative, this would suggest that it intends to do what it can to keep the market growing.

The Stamp Duty holiday also gives first time buyers an affordable way to get onto the ladder and release some of the pressure felt by some as they wait for that all important completion date. This came after a petition of more than 150,000 signatures was submitted to Parliament calling for an extension to the holiday, and again, as this was ultimately acted on by the Chancellor, highlights that the government are keen to do what they can to keep the housing market afloat.

Earlier this month, Brunsdon Financial launched its brand-new offering; B Mortgage Services. Whether you’re a home-owner, first-time buyer or an investor, we’d love to hear from you. You can find out more about B Mortgages by visiting our dedicated page, or get in touch via the form below.

Source 1, source 2, source 3, source 4

Brunsdon Financial is not responsible for the content of third-party websites. Your home may be repossessed if you do not keep up repayments on your mortgage.

Any information regarding tax treatment or legislation is based on our understanding of current UK legislation law, tax law and HM Revenue and Customs’ Practive (March 2021), all of which may be subject to change.

The Housing Market 2021 – what to expect this year

The Housing Market 2021 – what to expect this year

Chancellor Rishi Sunak’s Budget delivery earlier this month was, as expected, heavily focused on getting the country back up and running following the last twelve months of the coronavirus pandemic.

Among the announcements included were key measures to support the housing market and the government’s goal of turning “generation rent” into “generation buy”. Many analysts look at the housing market as an indicator of the overall health of the economy. It was reported by Halifax that 2021 has seen a slightly softer start in terms of growth, with February seeing a 0.1% decrease on the previous month. Despite this, house prices are still in a strong position, with figures 5.2% higher than last February.

The Stamp Duty holiday continues

One of the key drivers for housing market growth seen over the last year is that of the Stamp Duty holiday. It was announced in this year’s Budget that this would be extended in England and Northern Ireland to help deal with the backlog of purchases that have built up due to the pandemic.

Benefitting investors and homebuyers, the tax-free allowance for the first £500,000 spent on a property will continue until 30 June. This gives a saving of up to £15,000. After this time, the threshold will drop to £250,000 until 30 September, with it then reverting to its normal level of £125,000. The separate first-time buyer threshold of £300,000 will return after June.

Wales’ Stamp Duty holiday of up to £250,000 has been extended until the end of June and Scotland’s temporary holiday on the same amount came to an end on 31st March.

New 95% mortgage initiative introduced

As well as an extension to the tax-free allowance, the government has also introduced a new 95% Mortgage Scheme. The aim is to increase the number of 95% loan-to-value (LTV) mortgages available to homebuyers. Data provided by Moneyfacts shows that there were five 95% LTV products available last month compared with 391 in March 2020.

The scheme will give banks and building societies a chance to buy a guarantee on the portion of the mortgage between 80% and 95%. This means that the government will cover that chunk of the lender’s losses should the borrower get into financial difficulty, thereby incentivising lenders to increase the amount up to 95% LTV products they currently offer. The initiative will start in April and run until the end of 2022.

Will the measures help to keep the housing market buoyant?

Following the 2008 financial crash, very high LTV mortgages have been rare to come by. This gave an indication into the fear that lenders had about house prices crashing. As the new 95% mortgage scheme is a government-backed initiative, this would suggest that it intends to do what it can to keep the market growing.

The Stamp Duty holiday also gives first time buyers an affordable way to get onto the ladder and release some of the pressure felt by some as they wait for that all important completion date. This came after a petition of more than 150,000 signatures was submitted to Parliament calling for an extension to the holiday, and again, as this was ultimately acted on by the Chancellor, highlights that the government are keen to do what they can to keep the housing market afloat.

Earlier this month, Brunsdon Financial launched its brand-new offering; B Mortgage Services. Whether you’re a home-owner, first-time buyer or an investor, we’d love to hear from you. You can find out more about B Mortgages by visiting our dedicated page, or get in touch via the form below.

Source 1, source 2, source 3, source 4

Brunsdon Financial is not responsible for the content of third-party websites. Your home may be repossessed if you do not keep up repayments on your mortgage.

Any information regarding tax treatment or legislation is based on our understanding of current UK legislation law, tax law and HM Revenue and Customs’ Practive (March 2021), all of which may be subject to change.

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