The recent budget was the first from new chancellor Rishi Sunak. Designed to help boost confidence in the newly elected Government, and prepare the country for Brexit, the budget was hotly anticipated by people across all industries and sectors.
Those in the housing market were especially hopeful that the chancellor would include measures to help boost home buying. So what did the budget have in store, and what could it mean for your 2020 move?
Many in the housing sector believe Stamp Duty is partially responsible for fewer first-time buyers securing properties. Before the budget was announced, there were rumours that Stamp Duty would be revamped and that first-time buyers would get a financial boost.
Boris Johnson had previously said the Stamp Duty threshold should be raised from £125,000 to £500,000 in order to make home buying more affordable. However, this didn’t happen and, for now at least, Stamp Duty rates will remain the same.
Lifetime mortgages and First Homes scheme
While Stamp Duty didn’t get the hoped-for rethink, there was some good news for first-time buyers as the Government introduced Lifetime Mortgages. These extra-long loans are designed to help first-time buyers secure a home and can be accessed with just a 5% deposit.
Lifetime Mortgages were launched in conjunction with the Government’s new First Homes scheme. This scheme could see local first-time buyers secure discounts of up to 30% on homes, something that could help thousands get a foot on the property ladder. It’s likely that this scheme will largely include new build, affordable properties, although some other types of home may also be available to first-time buyers.
Increased rates for overseas buyers
In an effort to give local buyers a head start, the Government introduced a new 2% rate of Stamp Duty for overseas house hunters. This means people based abroad will need to pay extra if they want to secure a property in the UK.
This measure is unlikely to have much of an impact in many parts of the country. However, in London, and other areas with a high level of overseas investment, it could help to free up more properties for first time buyers and local landlords.
Emergency interest rate cut
Soon after the budget was announced, the Bank of England dramatically slashed interest rates from 0.75% to 0.25%. This measure was taken in response to the emerging COVID-19 pandemic and is something that’s set to have a big impact on the housing market. While this interest rate cut hasn’t yet had an effect on the mortgage rates offered by major lenders, it’s likely to have a big impact in the coming months.
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