The stamp duty holiday has been extended for another three months and a scheme to provide guarantees to mortgage lenders will be launched in April, to support cash-strapped homebuyers and boost the property market.
A Government taskforce will also be set up to promote the adoption of modern methods of construction (MMC) – such as modular homes – across the development industry.
Chancellor Rishi Sunak unveiled plans in today’s Budget to continue the suspension of stamp duty land tax on houses worth up to £500,000, which has been in place in England and Northern Ireland since last July.
The tax break for will now continue until the end of June, after which the nil rate band will be set at £250,000, double its pre-Covid standard level – until the end of September.
In addition, the Government is to introduce a new mortgage guarantee scheme next month, which will provide a guarantee to lenders across the UK who offer 95% mortgages to people with a deposit of just 5% of the property price.
The scheme will be available for new mortgages offered up to 31 December 2022, and all buyers will have the opportunity to fix their initial mortgage rate for at least five years should they wish to.
Industry experts welcomed the announcements but warned they did not go far enough towards delivery of – as opposed to acquisition of – much-needed new homes.
Caroline Baker, property consultancy Cushman & Wakefield’s managing partner for the North West, said: “There is no doubt that the extension of stamp duty exemption and the mortgage guarantee schemes will keep the housing market moving, but in my view the focus should have been more on delivering new homes rather than stimulating home ownership.
“The region’s build-to-rent market is one of the strongest outside London and it would have been good to see more support to further stimulate this. Hopefully, some of the stimulus for the green economy will find its way to delivering more energy efficient homes.”
And Mathew Anwyl, managing director of housebuilder Anwyl, said: “We are pleased that the construction sector has been recognised in the Budget for the huge contribution it makes to the UK economy and… the help for home buyers is positive news for the industry.
“The housing market in North Wales and the North West remains buoyant but Government support remains key to its long-term future. Government guarantees on 95% mortgages should certainly provide an additional boost to those buying with a smaller deposit.
“However, we would like to see longer term reform of stamp duty to ensure it does not present a significant barrier for purchasers when it returns to pre-pandemic levels.”
The Government will also set up a taskforce on modern methods of construction, comprising “world-leading experts from across government and industry”, according to the Budget documents.
The taskforce’s aim will be to encourage faster adoption of modular and other construction methods to speed up housebuilding and reduce costs, and it will be headquartered within the Ministry of Housing, Communities and Local Government.
Meanwhile, commentators described as insufficient the chancellor’s plan to extend the current 100% business rates holiday for the retail, hospitality and leisure sectors for an extra three months to the end of June, and then provide an up to two-thirds business rates holiday for the following nine months.
Julie Chalmers, senior associate at rating agency Gerald Eve, said: “The cap on the two-thirds rates discount is well-intentioned but poorly designed. While it rightly limits the discounts for those that continued to trade well, the imposition of a cap at a business rather than property level will severely punish even modestly sized chains.
“Restaurants will face full rates bills on a significant proportion – often the majority – of their outlets.”
Cushman & Wakefield’s Baker added: “The support for hospitality and tourism is much needed but will not go far enough for a sector so important to our region that has effectively be closed for year.
“Hopefully the success of the vaccine roll-out and the ability to finally return to the much-loved bars, restaurants and theatres across our region will support those businesses to bounce back.