Chancellor Rishi Sunak has announced that homebuyers will be exempt from stamp duty on homes up to £500,0000 until March 2021, in an effort to stimulate the housing market during the pandemic.
The stamp duty holiday will take place with immediate effect as property transactions were down, house prices had fallen which had created uncertainty within the market.
This in effect means that buyers who purchase houses of £500,0000 and under would save on average £4,500.
Read on to find out more about this development or click a link below to jump to a chapter of your choice.
Chapters
- How Much Will You Save?
- Nationwide Reintroduces 10% Deposit Mortgage
- Will This Reinvigorate the Housing Market?
How Much Will You Save?
Currently stamp duty is charged on purchases of £125,000 or more.
First-time buyers are also exempt on properties of £300,000 or less and there is relief on properties of between £300,000 and £500,000.
Lifting the threshold to £500,000 means more home movers, as well as first-time buyers, will be exempt from the tax.
But it also means first-time buyers purchasing homes of between £300,000 and £500,000 will also benefit, which is really positive news.
Mark Arnold CEO of Kensington Mortgages stated the following:-
"A stamp duty holiday is a huge market change and this has never happened before. First-time buyers, second steppers and older homeowners will all benefit."
He added:
"Extending the threshold to £500k frees up larger properties for growing families and enables the next generation of homebuyers to step onto or even up the ladder."
The stamp duty cut is expected to impact around 90% of people moving home in England and Norther Ireland.
The fact the chancellor has called for the change with immediate effect has also come as good news to property and mortgage experts who were concerned, he might wait until Autumn to introduce the measures, which in turn would have caused a lack of stability within the market.
The following statement was a positive soundbite:
"The government will expect the change to stimulate more housing sales over the second half of the year and that savings made by buyers will be reinvested in home improvements, white goods and furniture, rather than bidding up the cost of housing."
Nationwide Reintroduces 10% Deposit Mortgage
The next bit of good news is that Nationwide are reintroducing their 10% deposit mortgage for first time buyers.
The move comes in response to the introduction of a stamp duty holiday which will see the tax frozen on properties up to £500,000 until March 2021.
This in effect means to the first-time buyer, 'higher LTV lending'.
Nationwide is referring to loans of 90% loan-to-value which means the borrower needs a loan for 90% of the property’s value, and therefore has a 10% deposit.
Will This Reinvigorate the Housing Market?
It should be noted that first-time buyers are vital to breathing life into the housing market and economy.
We understand one of the biggest barriers to homeownership is raising a deposit, along with job insecurity.
We welcome the government’s announcement on stamp duty and hope the combined changes create a positive impact on a market that, despite being in relatively good health, is still recovering.
The building society’s 90% LTV mortgages for first-time buyers will be available direct with Nationwide as well as via ourselves and other suitable brokers.
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Disclaimer: Cormorant Mortgages does not provide advice in relation to savings and investments. This article is intended for discussion only and does not propose financial advice in any way, and therefore should not be construed as such. Your property may be repossessed if you do not keep up with mortgage repayments. You may be able to obtain cheaper deals by going direct to a lender.