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.
When investing, the value of your investment may rise or fall and there are no guarantees you will get back all the capital you have invested.
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.