It's been estimated that 600,000 homebuyers agreeing a sale from May 2020 onwards will not pay any stamp duty at all and are set to be saving £5 billion in total – that is an average of £4,660 each, according to Zoopla.
Since the property market reopened last summer, we've seen a market boom that's led to record activity for new listings and sales agreed in the UK, as homeowners rush to find somewhere more suited to their lockdown needs and lifestyle.
Budget: Stamp duty holiday extended and lower mortgage deposits introduced
The stamp duty holiday for housebuyers is being extended for a further three months until the end of June, Rishi Sunak announced.
Purchases up to £500,000 will continue to be free from the tax – and homes bought up to a value of £250,000 until the end of September.
The Chancellor also confirmed a new scheme to provide mortgages to homebuyers who put forward only a 5 per cent deposit, with a government guarantee.
“A policy that gives people who can’t afford a big deposit the chance to buy their own home,” he told MPs. “As the prime minister has said, we want to turn generation rent into generation buy.”
The stamp duty cut is hugely expensive – the three-month extension costing an estimated £1bn, at a time when the government is slashing overseas aid and, in October, Universal Credit.
But the property market was worried about around 160,000 home sales stuck in limbo and at risk of falling through if the holiday was not extended.
Mr Sunak told MPs: “I can announce today the £500,000 nil rate band will not end on 31 March, it will end on 30 June.
“Then, to smooth the transition back to normal, the nil rate band will be £250,000, double its standard level, until the end of September – and we will only return to the usual level of £125,000 from 1 October.”
And on the “mortgage guarantee”, the Chancellor said: “Lenders who provide mortgages to homebuyers who can only afford a 5 per cent deposit will benefit from a government guarantee on those mortgages.
“I’m pleased to say that several of the country’s largest lenders including Lloyds, NatWest, Santander, Barclays and HSBC will be offering these 95 per cent mortgages from next month, and I know more, including Virgin Money, will follow shortly after.”
Mr Sunak also
* Confirmed the extension of the furlough scheme until the end of September, although employers will be expected to make a contribution from July.
* Extended the 5 per cent reduced rate of VAT for the tourism and hospitality sector to the end of September, with an interim rate of 12.5 per cent for another six months after that.
* Continued the business rates holiday for the retail, hospitality and leisure sectors until the end of June, with a two-thirds discount for the remaining nine months of the year.
The Chancellor also unveiled forecasts suggesting the economy will return to its pre-Covid level by the middle of next year – six months earlier than they previously thought.
But he told MPs that, despite the £280bn of support already committed to protecting the economy, the damage done by the virus has been “acute””.
“Our economy has shrunk by 10 per cent – the largest fall in over 300 years. Our borrowing is the highest it has been outside of wartime.
“It’s going to take this country – and the whole world – a long time to recover from this extraordinary economic situation. But we will recover.”