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Rutland Home Buyers £2,992,615 Windfall as Stamp Duty Holiday Stretched to September...

... and new 5% deposit mortgages for

Rutland first-time buyers

The Chancellor Rishi Sunak has announced two initiatives to keep the Rutland property market firing on all cylinders into 2021.

Firstly, the £500,000 zero-rate Stamp Duty band has been extended to the 30th June 2021. After then it will phase down to £250,000 for an additional three months, returning to the pre-pandemic levels on the 1st October 2021. Secondly, Mr Sunak announced a scheme that will allow Rutland first-time buyers to buy their Rutland home with a 5% deposit from this April. Let me look at what each initiative means to the Rutland property market.

1.    Stamp Duty Holiday extension for Rutland home buyers

Coming out of the first lockdown in the early summer of 2020, there was a lot of apprehension that the British property market would flounder. Therefore, when the Stamp Duty Holiday was announced back in July 2020 to boost the property market, the deadline was set at the 31st March 2021.  Little did anyone know of the snowball effect of people wanting to move because of the initial lockdown in the spring of 2020, the pent-up demand following the conclusion of the EU negotiations with the subsequent ‘Boris Bounce’ and then the Stamp Duty Holiday which made the perfect storm for what has been the busiest property market in Rutland since 2001/2.

The average stamp duty paid by a

Rutland homebuyer is £8,624

The reason the Stamp Duty extension is important is that many estate agents and solicitors have been warning for the last couple of months that home buyers would pull out of property deals or renegotiate if they could not complete their sale in time before the Stamp Duty Holiday ended.

So, by phasing down the Stamp Duty Holiday, this will allow some breathing space for burdened solicitors and mortgage lenders, thus decreasing the number of buyers pulling out of their property purchase because they unexpectedly have to find up to an extra £15,000 in Stamp Duty when property sales do not complete on time.

There are currently 347 properties that are Sold STC in Rutland alone and the vast majority of those will save money on their stamp duty because of this extension

So, what does the Stamp Duty extension mean for Rutland house prices?

The extension has heightened confidence in the Rutland property market. The Government watchdog ‘The Office for Budget Responsibility’, has predicted that house prices in 4 years’ time will be just over 13% higher, compared to the pre-Christmas predicted figure  of 11% growth (over the same time frame).

 2.    5% deposit mortgages for Rutland first-time buyers

From next month, Rutland first-time buyers will be able to buy Rutland homes worth up to £600,000 with a 5% deposit and a Government-backed mortgage with a fixed rate of up to 5 years.

Rishi Sunak wants to turn the millennial ‘Generation Renters’ into ‘Generation Buyers’ and believes this initiative should be able to help two million people get on the property ladder.

The Government backed scheme will be open to Rutland first-time buyers for 21 months (until the end of 2022) and available from lenders including NatWest, Lloyds and HSBC (plus others to be announced soon). It will be available on all Rutland homes new or second hand (previous schemes applied to new homes only).

5% deposit mortgages were all but withdrawn from the market at the start of the pandemic in spring 2020 with an almost default minimum deposit of 10% (even as high as 15% in the autumn just gone) putting homeownership out of reach for all but the wealthiest Rutland first-time buyers.

I must admit I found it a scandal that homeownership among the 25 to 34 year olds plummeted from 69% in 1981 to 36% by 2014, although with certain Government incentives and low interest rates since then, that had risen to 41% by last year, but it’s not enough

With so many young families paying huge sums in rent, who could effortlessly afford to make mortgage repayments on the same property, they haven’t been able to save enough for a 10% initial mortgage deposit, let alone 15%.

Yet now with these new 5% deposit mortgages, many Rutland first-time buyers will be able to afford to buy their first home in Rutland. Banks will typically lend between four and a half and five times the gross annual income – this means with a modest 5% deposit; many Rutland 20 and 30 somethings will now be able to buy their first home. Just before I finish this topic, the 5% deposit mortgages will also be available to current Rutland homeowners who don’t have the equity built up in their existing home – thus helping second or third (or more) time Rutland buyers as well.

If you are a Rutland homeowner or buyer and you want to discuss your options on selling or buying in Rutland and the surrounding area, do not hesitate to contact me personally.  You can do so by dropping me an email or giving me a call - I'd love to hear from you.