Friday, May 20, 2022
Real EstateUK

Rishi Sunak extends tax breaks for home-buyers until October

Rishi Sunak

The temporary measure was first introduced in July 2020, which meant nine out of 10 people buying a main home were exempt

British finance minister Rishi Sunak extended tax breaks for home-buyers until October, keeping many property purchases exempt from stamp duty land tax that is likely to fuel a boom in property sales during the pandemic.

In his annual budget announcement, Sunak also announced a government-funded mortgage guarantee scheme for first-time buyers (FTBs) who cannot afford large deposits required by lenders.

On stamp duty, a tax which significantly increases transaction costs when moving homes, Sunak said: The 500,000 pound nil rate band will not end on 31st of March, it will end on the 30th of June.

Then, to smooth the transition back to normal, the nil rate band will be 250,000 pounds, double its standard level, until the end of September — and we will only return to the usual level of 125,000 pounds from October 1st, he said.

The temporary measure was first introduced in July 2020, which meant nine out of 10 people buying a main home were exempt. Those buying homes above the 500,000 pound threshold still benefit from a much lower tax bill on the sale.

The policy only applies in England and Northern Ireland, as Scotland and Wales have different tax systems.

In the final months of 2020 the Bank of England (BoE) reported the highest number of mortgage approvals for house purchase since just before the financial crisis in 2007, and official data showed the biggest surge in house prices since 2014.

But Sunak said there were still barriers to entry for first-time buyers, outlining a scheme that will see lenders offering 95% mortgages for those who can only afford a 5% deposit from next month.

He described it as: A policy that gives people who can’t afford a big deposit the chance to buy their own home.


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