This week Chancellor Rishi Sunak outlined the Spring Budget. He announced a range of measures that will affect the property industry following a challenging year.
The Furlough scheme has been extended until September 2021, the stamp duty in England and Northern Ireland has been extended to September (with a tapered system brought in from July), and there is a new government-backed mortgage guarantee scheme to help reintroduce low LTV mortgages.
This is the most significant announcement for the private rented sector for the short term. This extension of the furlough scheme, combined with the uplift in Universal Credit, will provide additional support for many tenants across Scotland and safeguard the finances of landlords and letting agents by helping to prevent rent arrears. That said, when the furlough scheme comes to an end there could be some redundancies which could affect tenants’ ability to pay their monthly rent.
Private tenants have been the hardest hit by the pandemic – and have found it difficult obtaining emergency housing from local authorities – whereas homeowners have been able to take a 6-month mortgage break which would be added to their loan.
As yet, there have been no plans to offer financial support for those who need to pay off rent debts that have built up as a result of the pandemic, and therefore face the prospect of damaged credit scores and being able to find somewhere to live in the private sector.
The stamp duty holiday has been extended until July 31st, when a tapered payment system will be introduced until the tax holiday ends in September. This applies to stamp duty in England and Northern Ireland, with the news that Wales will follow suit with LTT. However, in Scotland those in the middle of a property purchase will lose out as Kate Forbes, the Finance Secretary, has stated that LBTT will end as planned. We expect there will be pressure from within the industry for the Scottish government to change its stance on this.
Mortgage guarantee scheme
A new mortgage guarantee scheme aims to bring back low deposit mortgages that have been largely withdrawn by UK lenders since the start of the pandemic. This policy now gives people a chance to buy their own home with just a 5% deposit. The mortgage is available from some of the UK’s largest lenders including Barclays, Santander and Lloyds and can be used for properties up to the value of £600,00. The scheme is open to all buyers, not just first-time buyers, and is not limited to new build homes. It will run from April 2021 to December 31st 2022.