The Budget 2021

The Budget 2021

Rishi Sunak has today taken centre stage and outlined ‘The Budget 2021’ indicating tax and spending plans for the year ahead.

As your local Estate Agent, we wanted to keep you posted on how the latest government announcement will effect the housing market.

There have been several key amendments that should further stimulate the UK property market.

95% mortgage support

Funding for house hunters with limited deposits. Addressing the fact that 95% mortgages have all but dried up since the Covid crisis hit, it’s been confirmed that the Treasury will guarantee 95% mortgages as part of government plans to turn “generation rent into generation buy”. It’s not restricted to first-time buyers or new-build homes, like the Help to Buy scheme, but applicants must still have a regular income. This will go some way to ensuring property prices remain healthy.

Stamp duty holiday extension

Many people working in the housing sector have been calling for the six-month stamp duty holiday to be extended beyond its current expiry date. Under the scheme, introduced by the Government in July 2020, anyone who purchases a property that completes by 31 March 2021 will only have to pay tax on the amount over £500,000.

Today, in The Budget 2021, the Chancellor has extended the stamp duty holiday for properties up to £500,000 until the 30th June 2021, in order to prevent sales falling through after the 31 March deadline expires.

The Chancellor has also tapered the end of the scheme by extending it as it stands until June 30th where the nil rate band will drop to £250k before finally ending the holiday on 30th September 2021.

With the zero-rated stamp duty limit extended to £250k until the end of September and the average UK house price being £252k, it means that thousands of people can benefit from this incentive – particularly first and second-time buyers.

Capital Gains Tax

Capital gains tax (CGT) is also considered low-hanging fruit for a Budget increase. Currently CGT is charged at 18% for basic rate taxpayers and 28% for higher rate taxpayers but a shake-up could be underway. Capital Gains Tax can have a big impact on the rental market space. The level of tax on profit made from a second property at point of sale can eat into any profits gained from owning that asset. For now, this will remain at 18% and 28%.

The Furlough Scheme

The furlough scheme has now been extended until the end of September 2021.

Chancellor Rishi Sunak has announced in The Budget 2021 that the furlough scheme – which pays 80% of employees’ wages for the hours they cannot work in the pandemic – would help millions through “the challenging months ahead”.

Some 600,000 more self-employed people will also be eligible for government help as access to grants is widened.

The government said furloughed employees would continue to receive 80% of their current salary, capped at £2,500 a month, until the scheme ends at the end of September. Employers will be asked for a contribution of 10% from July and 20% in August and September towards the hours their staff do not work.

The chancellor has also announced that a fourth self-employment support grant will be available to claim from next month.

How will it affect me?

Many clients have already reached out to us to see how it will affect them. Sky have kindly put together a Budget Calculator which highlights if you are better or worse off following Chancellor Rishi Sunak’s statement.

At VitalSpace, we appreciate there is considerable uncertainty at these times, and vendors want clear guidance. We are more than happy to provide as much assistance and information as you can. We can be contacted in many ways, which means you can connect with us from the comfort of your own home.