The extension of the Stamp Duty holiday from 31 March to 30 June, with a lower banding until 30 September, will certainly help ease the pressure being felt by purchasers, conveyancers and lenders on completion transactions.
There is much speculation on whether the Chancellor has created another cliff-edge scenario. The industry was lobbying for a tapered approach where a transaction could proceed past the original 31 March deadline if it had reached a certain point in the process ahead of that date.
The approach of an open extension, whilst easing the pressure for many, will certainly stimulate new activity and there is a prediction for a second surge of home-movers. There is already evidence of this, with Rightmove reporting its busiest day ever on the day of the Budget, seeing over 8 million visits to their website that day. In addition, they also reported that enquiries to estate agents were 82% higher than on the same day last year.
The second important announcement was the return of 95% Mortgage Guarantee Scheme. This scheme has been designed to assist first time buyers onto the property ladder, alleviating the challenge of raising such large deposits.
Stamp Duty changes
The Stamp Duty holiday has been extended until 30 June for property priced up to £500,000, potentially saving home buyers up to £15,000.
And, from 30 June the Stamp Duty threshold will change to £250,000, so home buyers will only pay stamp duty for properties over this amount.
This new threshold of £250,000 will stay in place until 30 September at which stage the threshold will revert to £125,000.
95% Mortgage Guarantee Scheme
This scheme has been designed similarly to the previous 95% Help to Buy Mortgage Guarantee Scheme which was launched in 2013 and helped over 100,000 households purchase a home.
Under the terms of the new scheme, the government will guarantee the portion of the mortgage over 80% (with a 95% mortgage, the remaining 15%).
Several high street lenders have announced they will be taking part in the new scheme, including Lloyds Banking Group, Santander, NatWest, Barclays and HSBC, with Virgin Money to follow.
The scheme will launch in April and is expected to be available until December 2022.
There will be certain eligibility for the scheme and below is the information we know so far:
- The scheme is applicable for residential mortgages only and is not available for the purchase of second homes or buy-to-let
- Applications need to be taken out by individual(s), not a limited company
- Property must be in the UK with a maximum value of £600,000
- Application loan to value (LTV) must be between 90% and 95%
- Only available on a repayment basis, not interest-only
- Borrowers must meet the lender’s affordability and credit policy
- Products available will be on a long-term fixed basis, minimum product term five years
How we are working for you
Here at Sesame, your Lender Relationship team continues to have focused conversations with our lender partners around the launch of the new 95% mortgage guarantee scheme. Whether this be further product information from the lenders who have already announced their intention to launch, or discussions with others around their plans to enter this sector either via the scheme or potentially their own products. We are sure the next quarter will be a busy one with exciting news and developments from our lender partners.
Lender service is a topic on the agenda for every meeting we hold, and this has become even more important over the past few months. To support our members we have created a new resource tool providing an update on lenders’ approach to the upcoming stamp duty deadline. This includes information on their current completion service level standards and whether they will accept indemnity insurance for searches.
We will continue to keep this relevant and with the most up to date information as we closer to the upcoming deadlines.