Chancellor vows to turn 'generation rent into generation buy'
- Credit: PA
House buyers got the news they were waiting for when Rishi Sunak pledged to extend stamp duty to June and back low deposit mortgages.
The chancellor, delivering his budget in the House of Commons, ended the nail-biting wait for people who are in the process of buying a house but not completed by extending the stamp duty holiday from March 31 to June 30.
He also stated the raised stamp duty tax threshold of £500,000 he brought in last year would become £250,000 from September and revert to £125,000 from October.
It comes after Mr Sunak slashed stamp duty to zero for almost 90pc of home buyers last year helping buyers save up to £15,000 on a home purchase.
But Mr Sunak also said there was "still a barrier to people getting onto the property ladder" which was the cost of a deposit, and introduced a government-backed mortgage guarantee scheme.
This allows buyers to put down a 5pc deposit with a 95pc mortgage, starting from next month. "This gives people...the chance to buy their own home and turn generation rent into generation buy."
Jamie Minors, who runs Minors & Brady estate agents, with four offices across Norfolk, said: "We have more than 600 properties that are sale agreed, but not yet through to completion, so all of these sellers and buyers have a better chance to save up to £15,000 and not have to fear their house sale falling through over it.
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"House prices will remain strong, keeping many in jobs so this is propping up the economy.
"The 5pc government-backed guaranteed mortgages will add more fuel to the fire in the housing market, as lenders pulled their 95pc LTV (loan to value) mortgages due to the pandemic and uncertainty. This will mean more buyers being able to get on to the ladder, more demand and a 'dominoes effect' leading to a huge spring boost.
"The government are now players in the housing market, meaning the chances of a crash are greatly limited; it will not want its own equity at risk."
Jan Hytch, chairwoman of the NDAEA, Norwich & District Association of Estate Agents, and a partner at Arnolds Keys property agency, said: “In future budgets the chancellor should remove stamp duty for downsizers.
"Anything which helps first-time buyers into the market is welcome... if we can inject movement into the bottom of the market, it will get things moving further up the chain."
Natalie Howlett-Clarke, joint head of residential at Savills Norwich, said: “Coming at a time when demand is outstripping supply, extending the holiday until the mid-year point may also bring more stock to the market and allow the spring sales market to function more normally."
Keith Hood, managing director of Warners Financial Services, in Wymondham, said: "New buyers will have to move fast if they want to benefit from the extension. My advice is to get your mortgage agreed in principle now, check your solicitor has the capacity and make sure the person you are buying from is also motivated.
"The 95pc mortgage guarantee scheme has longer term implications. The big benefit is that it applies to all borrowers, not just first time buyers and it's not aimed at new build homes."
The stamp duty savers
Social media executive Autumn Lewis, 23, saved £2,400 in stamp duty on the purchase of her house in Sprowston with her partner, 24. "That's a lot of money to us which we can spend on the house."
Pensioners Graham and Ann Woodhouse, who live in a four bedroom house in Swaffham, are in the process of moving to a three bedroom bungalow near Norwich. They want to be nearer friends and family.
Mr Woodhouse said: "We will save around £7,000 in stamp duty because of the chancellor's extension. It helps to ease the financial burden of moving which is so expensive.
"For many who were close to completion but touch and go whether the sale would go through, the extension is a real bonus and a real incentive to get moving."
Georgina Taylor, a digital content writer, 21, moved to Norwich from Kent to go to university and then started work. "I thought I'd be renting for a while as I am just starting to build up a life here.
"I'd love to move to just outside the city centre. After living in a relatively small flat for around six months, I would ideally want to move into something a little bit bigger for two people like a semi-detached house.
"I have already started looking this week at possible houses to move into after my contract ends for my flat. It feels more realistic that I'll be able to get a mortgage soon rather than stay in this continuous cycle of renting."