In last week’s Spring Budget, Chancellor Rishi Sunak outlined his commitment to turn ‘Generation Rent’ into ‘Generation Buy’, announcing a series of measures to support first time buyers on to the property ladder.
The Government confirmed the extension of the stamp duty ‘holiday’ to 30th June, meaning buyers do not have to pay any tax on the first £500,000 of the value of the property, and those buying a property priced at less than £500,000 will pay no stamp duty at all. Following this, for three months up until the end of September, buyers will pay no stamp duty on the first £250,000 of the property’s value, providing a gradual easing of the stamp duty ‘holiday’.
In addition, Rishi Sunak announced a range of Government backed 95% mortgages, enabling first-time buyers to get on to the property ladder with just a 5% deposit, supported by a 95% loan to value mortgage.
Wondering how this impacts you? We’ve broken down some common questions.
I’m only just starting my property search – could I still benefit from the stamp duty ‘holiday’?
Yes – you could still benefit from the stamp duty ‘holiday’ whether you’re mid-way through your search, or just starting. The stamp duty savings on the first £500,000 applies to all purchasers who complete by 30th June, and savings up to the £250,000 threshold apply if you complete by the end of September.
Moreover, beyond September first-time buyers still have a tax-free limit of up to £300,000 on all homes under £500,000 – so you can still make savings, even if you’re not quite ready to make the leap on to the property ladder just yet.
How much could I save?
The savings from the stamp duty holiday extension could be significant, as you pay nothing on the first £500,000, and varying percentages for any portion above this threshold. For instance, for properties between £500,001 to £925,000, a 5% tax applies to the portion above the £500,000 threshold. Taking an example, if your property is valued at £550,000, you would pay a 5% stamp duty just on £50,000, equating to £2,500.
Therefore, the stamp duty ‘holiday’ could result in big savings – for example at Kite Meadows, you could save up to £15,000 off a five-bedroom townhouse.
I have a 5% deposit saved – will that be enough to get on the property ladder?
Since 2013, first-time buyers have been able to use Help to Buy to purchase a new-build property with a 5% deposit, helping to lower one of the main barriers to property ownership. This scheme continues to be available to first time buyers, with purchasers able to apply for a Help to Buy: Equity Loan of up to 20% of the property’s value (and up to 40% in London) to help further expand their budget.
Shared Ownership is another popular option for buyers with smaller savings – the part-buy, part-rent option only requires a 5-10% deposit on the purchased share price, rather than on the full value of the property.
In addition to these schemes, the newly announced Government-backed 95% mortgages will give buyers even more choice, with a range of high street lenders already having agreed to provide 95% mortgages on market sale homes valued up to £600,000.
Through our exclusive partnership with Meridian Mortgages, one of the industry’s most respected, specialist new build mortgage advisers, we can help buyers navigate this process to ensure they choose the best option for them.
Can I benefit if I’m a second-stepper?
Absolutely – the stamp duty holiday ‘extension’ applies to all purchases until the end of September, so you can make savings no matter where you are in your property journey.
Catalyst is here to help buyers find a home they love, with a range of developments London and the South East. Click here to find out more.