One of the most hotly anticipated Budget announcements in decades has now been revealed, with Chancellor of the Exchequer Rishi Sunak sharing his plan on how to recover from the financial setbacks of the Coronavirus pandemic with the British public.
The challenge facing Mr Sunak going into this budget announcement was not an enviable one. The British economy has been hit hard by something nobody could have truly foreseen, and the recovery process will likely be long and arduous.
The way that Sunak would approach this recovery however was open to debate. In the mortgage industry, much of the focus leading up to the announcement has been regarding factors such as the stamp duty holiday and how prospective buyers will be supported in order to galvanise the wider housing market.
On 3rd March, all was revealed. We pick out some of the key areas for contractors and freelancers looking to buy their own home.
What’s the decision regarding Stamp Duty?
The Stamp Duty Holiday has been extended to the end of June. This will apply for all properties bought up to that date that cost less than £500,000.
People purchasing properties costing less than £250,000 will also be able to avoid paying Stamp Duty all the way up to the end of September.
How about affordability?
One of the biggest takeaways from the whole budget is a new initiative to enable 5% deposits to be put down on properties.
Supported by a government guarantee, a number of leading lenders will now be offering 95% mortgages to customers who can only afford a 5% deposit. This means that potentially more people will be able to get a foot on the property ladder, and support the property market’s role in the overall economic recovery process.
Sunak said that this initiative will help turn ‘generation rent into generation buy’. Lenders reported to be set to offer such mortgages include the likes of HSBC, Lloyds, NatWest, Barclays and Santander.
The scheme will launch in April and is set to run until October 2022.
Anything else of interest?
Moving slightly away from the housing market, Sunak announced that support for self-employed workers, such as contractors and freelancers, would be extended until September.
A further grant, the fourth of its kind under the Self-Employment Income Support Scheme, will now run from February to April, before a fifth grant will be offered covering May to September.
These grants cover up to 80% of three months’ profits up to £7,500. This means if you have been unable to work due to the pandemic as a contractor or freelancer, there is an opportunity to access the grant.
In fact, Sunak has announced that access to grants has been widened, with people who filed their 2019-2020 tax returns by midnight on 2nd March now able to access them. This should cover around 600,000 more self-employed people.
What’s the overall Budget verdict?
The extension of the Stamp Duty Holiday will be very much welcomed by people in the process of purchasing their first home, meaning they will avoid expenditure they were very keen to avoid.
The 5% deposit scheme is another exciting addition to the market. It could potentially be the opportunity that people seeking their own home but put off by high deposits needed to take the leap.
From our perspective in the contractor mortgage industry, both of the major mortgage-related budget headlines strike us as good news – as does the additional grants being made for self-employed workers.
The need to galvanise the market in light of the recent pandemic is important, and hopefully Rishi Sunak’s initiatives will bring about the desired results.
