How will the Budget 2021 affect the property sector? And how will the property market react? We look into it all here for you.
Earlier this month Chancellor, Rishi Sunak revealed his Budget for the year. As many predicted it centred around economic recovery as we battle through what’s left of the pandemic. Obviously Covid-19 has caused a dramatic shock to the economy so we expected some fairly significant changes and plenty of new policies to digest.
Here we will look at the Budget in relation to the property industry and how it will impact the sector now and into the future.
Here are the key policies that will come into play.
The Stamp Duty holiday extension
Back in July Sunak announced that the Stamp Duty threshold would increase from £125,000 to £500,000, until 31st March this year. He has now extended this by 3 months which will benefit home movers and first time buyers looking to move in the near future.
Guarantees for 5% mortgages
In another boost to all types of home buyer, the government will guarantee mortgages for buyers with a 5% deposit. This scheme will launch next month with most major lenders on board.
For those who are keen to move after lockdown but have a limited budget, this will come as welcome news.
£20/week increase in Universal Credit
For many tenants in affordable housing this will come as a much needed lifeline.
The only issue here is this uplift is currently only temporary, for 6 months, so it’s important that you don’t budget for this being in place long term in case the government doesn’t give in to the pressure from some quarters to extend the scheme.
However, there was more good news for those on low incomes as Sunak did announce Working Tax Credit claimants will get a £500 one-off payment and the minimum wage is set to increase to £8.91 an hour.
Furlough is extended
Until September. Despite the government hoping they can remove all Covid restrictions by June, they have kept furlough active beyond that. Mainly to help businesses who won’t see an instant recovery and to give employers the opportunity to phase their furloughed employees back into the workforce.
This should help prevent mass redundancies. Keeping people in jobs until business is strong again will help public spending thus keeping the property market on track for its strong recovery.
Extra support for domestic abuse survivors
This will give people who are currently suffering more of an opportunity to escape their current situation by moving home. This should help boost the rental sector in the short term.
Corporation tax increases
For investors who hold their properties under limited companies this will have an impact if they are making more than £50,000 per year in profits. If not, they won’t see any change.
If you’re a landlord whose investments make over £50,000 per year in a limited company you do have until 2023 to make any adjustments as you may see fit before the changes come into force.
New Infrastructure Bank
The Chancellor announced the creation of a new UK Infrastructure Bank that will have £12bn in capital with the aim of funding £40bn worth of public and private projects.
We expect the property market to play a big part in our economic recovery so it’s hoped some of these funds will be prioritised towards new housing projects – boosting the economy and the property sector in tandem.
So, there are lots of potential positives in here for home movers and renters, certainly in the short term.
Some property developers may also view this Budget favourably as the 5% mortgage guarantee scheme should create more potential buyers. Landlords on the other hand may want to reconsider certain aspects of their strategies.
What we’ve seen at E&M Property Solutions
In a nutshell, we’re very busy. The market is extremely buoyant at the moment across both sales and lettings. We fully expect this to continue as there’s a lot of people who have had a change of circumstances since the pandemic hit over a year ago, and plenty of others who just want to change where they live post-lockdown.
Some of these announcements from the Budget will also help the property sector continue its strong recovery and keep us busy.
Whether you’re looking at buying, selling, renting or investing, we’re here to help. If you want to find out more about our estate agency and property services in Burnley and across the North West, please contact our expert team on 01282 711560 or email email@example.comfirstname.lastname@example.org.