“Winter Is Coming” or “Now Is the Winter of Our Discontent?”
3 March 2021
In advance of the Budget, there has been much speculation as to what measures the Chancellor might introduce and of course, our concern has been how they might impact the housing market.
The speculation has largely occupied two schools of thought; those who thought that further positive measures might be announced before, inevitably, tax rises are implemented (the ‘Winter Is Coming’ school) and those who thought that immediate tax rises would be enacted (let’s call them the ‘Now Is The Winter of Our Discontent’ school).
We now know that Winter Is Coming but only after some further significant stimuli have been introduced. Firstly, the Stamp Duty holiday has been extended until the end of June in its current guise whereupon it will taper so that the first £250,000 of the purchase price remains exempt from SDLT until 30 September 2021. This is excellent news for those already involved in a transaction and a great relief to the thousands of stressed-out conveyancers across the country.
Secondly, the Chancellor has announced that first-time buyers will get a “government guarantee” for mortgages with a deposit of 5%. Many big lenders are already backing the scheme, according to the Chancellor.
The new mortgage guarantee scheme is designed to help more first-time buyers onto the housing ladder, to stimulate the housing market and to increase property transactions. Most banks suspended their mortgage products with 5% deposits during the Covid pandemic so the Chancellor is incentivising lenders to provide mortgages to first-time buyers and existing homeowners with deposits of just 5% to purchase properties worth up to £600,000.
Glaring by omission was any announcement as to Capital Gains Tax being aligned with Income Tax rates. There had been speculation that the Chancellor might increase CGT in such a manner and it may yet come to pass in the autumn or next spring. Those of you considering the sale of a second home or investment which carries a substantial gain may be well advised to sell in the next six months.
So, thank you Chancellor. We now know that whilst Winter Is Coming, before it arrives we may yet be made glorious summer by this Sunak of Yorks. (Apologies…groan…but when we found out his constituency was in Yorkshire, we could not resist the opportunity of this dreadful pun!)