Spring Budget Update – London Property Market
With the UK Spring Budget announcement, I will be talking about the Spring Budget announcement and how it will affect you as a London Property investor.
Alongside the announcement that proposed to help business owners and individuals – through extended Furlough, the income tax freeze, Universal Credit uplift, as well as a Fuel Duty tax freeze, Alcohol Duty Tax Freeze (and VAT cut for hospitality business extension), and the Self-Employment Grant, there were a few fantastic pieces of news for those looking to buy property.
Stamp Duty Holiday Extension
The Stamp Duty Holiday was originally planned to end on the 31st March 2021, and while this was incredibly helpful for the property market, many of us in the industry were hoping for a further extension.
The announcement shared that the Stamp Duty Holiday will now run until 30th June 2021, which means that those who are in the process of purchasing a home and were worried about missing the deadline, now have the time needed to continue without Stamp Duty coming into play – it was estimated that there were about 100,000 transactions expected to be affected by this.
There has been some concerns about whether the Stamp Duty Holiday has actually raised property prices, and we did see at the end of 2020 that the average price for London property went up to £515,000 (which was record-breaking), so that is a concern. We do know that, however, buyers have managed to make the most of the holiday and make savings so this has outweighed the concern slightly.
My Top Tips for Buyers – Get your offer in, if you can, before the 31st March. This is because, while this may feel like a very long time until the 30th June new deadline, the process to completion has been increased due to those in the industry, such as surveyors, council workers, and so on are having to work from home, and solicitors are being inundated with requests. You need to give yourself as much time as possible to ensure you can complete as right now, it is taking 3-4 months to complete.
Reintroduction of 95% Government Guaranteed Mortgages
The other property-related announcement within the Spring budget is that the Government will be backing 95% LTV mortgages for any “credit-worthy” household, for properties up to £600,000. This is to help assist first time homebuyers, and we will have to wait and see if this will actually help first time buyers to come onto the market, as the due diligence on them can be quite strict, and the high street lenders are beginning to announce what offerings they have within this 95% mortgage offering, with more expecting to come on the market soon. These include Lloyds, NatWest, Santander, Barclays and HSBC, with Virgin Money planning to announce a 95% mortgage at the end of April. These will be on offer until the end of 2022, and the government will give the banks and building societies an option to buy a guarantee on the portion of the mortgage between 80-95%, so that if a borrower gets into financial difficulty and have their property repossessed, the government will cover the losses by the lender.
With these two announcements in mind, you do need to consider a lot of points when thinking about buying a property, and I have several articles on this, or please get in touch if you would like assistance with finding a London property.
