Spring is finally here, we’ve enjoyed our first weekend of warm(ish) weather, schools have gone back and earlier this month the chancellor outlined measures that will be a welcome relief to those part way through or soon hoping to move house. Even ahead of Rishi Sunak’s announcement the strong activity that we witnessed in 2020 showed little sign of slowing.
New homes in Suffolk remain in high demand as people continue to want somewhere with more space both inside and out. Our website saw 3.1 million visits alone in February, up 70% on the same time last year and resulting in a staggering 75% more enquiries.
The measures outlined in the recent budget only look set to fortify that activity – although delays caused by the pandemic mean that while demand is high, stock levels are low and developers are having to play catch up.
An extension of the stamp duty holiday until 30 June will help those who were worried about completing before the previous deadline of 31 March. However, it will also benefit new buyers who are in a position to act quickly, but who have not yet found their dream home. A further extension of relief from the end of June to the end of September meanwhile came as a surprise.
In this period, the tax-free threshold will be set at £250,000, lower than the £500,000 currently in place but somewhat higher than the standard £125,000 that was expected. This means that up until 30 June the maximum saving enjoyed by buyers will remain at £15,000 – after which it will drop to £2,500 until 1 October.
While not perhaps the phased withdrawal some would have hoped for, it’s a bonus that will be particularly welcome in the mainstream market. It’s the second measure of a mortgage guarantee scheme, however, that has the potential to have the biggest impact on the new homes market.
Set to launch in April, it will enable all homebuyers to secure a mortgage with just a 5% deposit – with the government underwriting the remaining 95%. However, borrowers will still need to meet the other affordability requirements of lenders, which are effectively set by mortgage regulation. New-build and existing properties priced up to £600,000 are eligible and you’ll need to be buying a property to live in yourself – second homes and buy-to-let properties are not permitted.
Although all buyers are eligible, the scheme aims to address the significant challenge faced by first-time buyers of raising a deposit – reducing reliance on the ‘Bank of Mum and Dad’ and Help to Buy. Essentially a revision of the Help to Buy Mortgage Guarantee that operated from 2013 to 2017, the scheme supported just over 100,000 house purchases in its previous guise and at its peak was responsible for 12% of first-time buyer transactions.
Time will tell just how effective the scheme is this time around but – together with the prolonged stamp duty holiday and the extension of furlough – it should help to further boost buyer sentiment, support market activity and underpin house prices.
So, if you’re thinking of buying a new home this year then it’s not too late. As always we’re here to help and advise in any way we can – and the latest government incentives may just save you money.
For more information about the new homes market in Suffolk, contact Max Turner at Savills, Ipswich, on 01473 234826 or by email at MTurner@savills.com
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