With so many changes since lockdown, and a number of government backed schemes introduced designed to boost the UK property market during the pandemic, now could be a great time to buy your first home or move to your dream one.
In mid-May the UK property market exploded back into life after a near two-month shutdown, and activity, demand and sales have been on a level not seen for quite some time. Rightmove recently revealed a record month for property sales, with more than £37 billion worth of transactions between July 12 and August 8 … a 38% rise year on year (1). The mini boom showed no signs of slowing down, with people swopping their summer holidays for a house move instead.
Many have found themselves asking — is now a good time to buy, or will there simply be too much competition? Is it better to wait to see if prices fall a bit or act now while buyer conditions are favourable? With historically low interest rates, lenders jostling for business and the slow return of 90% and 95% LTV mortgages, this should place buyers in a good position when it comes to getting a good deal on their mortgage too.
Below we look at some of these schemes:
Stamp duty holiday
The temporary holiday started on July 8 2020 and will come to an end on March 31 2021. The Chancellor estimates that as a result 9 out of 10 main property buyers will pay no stamp duty when purchasing a home (1). Currently, first-time buyers make up the biggest proportion of the buying market (52%), nearly doubling over the past decade. The average first time buyer home in London costs £464,000 (2) (almost twice the rest of the UK) meaning a saving of £23,200 during the stamp duty holiday for a property at this price!
Help to buy scheme
The Help to Buy scheme was introduced in 2013 and offers an equity loan where the government lends first-time buyers and existing homeowners’ money to buy a newly-built home …providing they have at least a 5% deposit.
The purchase price must be no more than £600,000, and under the scheme you can borrow 20% of the purchase price interest-free for the first five years (up to 40% if you live in London) which is paid back after 25 years, or when you sell your home. The remainder you can borrow on a standard high street lender mortgage (must be repayment terms). The help to buy scheme has been recently extended until 2023, and to date a reported 270,000 new homes have been bought in this way nationwide! (3)
Shared Ownership offers you the chance to buy a share of your home (between 25% and 75% of the home’s value) while allowing you to pay rent on the remaining share. Later on, you could buy bigger shares when you can afford to. Your household needs to earn £80,000 a year or less outside London, or £90,000 a year or less in London, you need at least a 5% deposit and an approved mortgage for the remainder. The scheme is not limited to first time buyers either, if you previously owned or are buying a re-sale shared ownership property or housing association new build you could still be eligible. The government are set to re-launch the scheme in 2021 with details of a new 5 year programme which has received £12bn of funding and promises 180,000 new homes.
*Your home may be repossessed if you fail to keep up the repayments on your mortgage. Please ensure to seek out advice from a mortgage adviser or broker prior to making a commitment to purchasing a property.