Published 22 Jan 2021
2 Changes not to be missed when buying a home before the end of the 2021 Tax Year.
The Clock is ticking for home buyers...
The end of March signals the end of the tax year and normally sees companies and individuals rushing to get their financial paperwork in order. However, this year looks set to be an even busier one for anyone involved in the buying a residential property. The 31 March 2021 marks the end of two popular Government initiatives, our panel mortgage advisors at SRC Mortgages remind buyers of the key changes not to be missed if buying a home before 1 April.
London Help to Buy is changing from April 2021
The current London Help to Buy scheme is set to be replaced by a new version of Help to Buy as confirmed by the UK government.
From 1 April, the Help to buy scheme will no longer be available to existing home owners and will be restricted to first time buyers only. Currently the scheme is available to anyone that wants to buy a new-build home in England. Anyone that already has a home but requires financial assistance to buy a new home therefore needs to complete the purchase before the 31 March 2021.
The scheme allows people to borrow up to 20% of the cost of a new-build home from the Government on properties valued up to £600,000. You still need to provide a 5% cash deposit yourself leaving the remaining 75% covered by a mortgage. In London the Government loan available is increased to 40%. Borrowers benefit from not paying any interest on this loan for the first five years.
Regional price caps will also be introduced from this April, which will further restrict choice.
More information on the new Help to Buy scheme can be found at: https://www.helptobuy.gov.uk/equity-loan/help-to-buy-equity-loan-2021-2023/
Stamp Duty Land Tax Holiday to end after 31 March
The impact of the pandemic on the UK economy has been significant, with the hospitality and retail sectors both suffering major disruption. In an attempt to boost the economy and to keep the property market moving the Government introduced a Stamp Duty holiday last year.
On the 8 July 2020 the Chancellor announced a stamp duty holiday that cut the rate of Stamp Duty Land Tax to zero on all properties £500,000 and under. This holiday is set to expire on 31 March 2021.
The savings for buyers is considerable, for example, someone purchasing a property valued at £450,000 would ordinarily expect to pay £12,500 in SDLT, however if they can complete before the end of March then they would pay nothing.
Therefore, completing before the end of March can result in a considerable saving.
Don’t miss the deadline
There is still time to take advantage of these schemes, even if you haven’t yet found a property. If you are part way through a purchase it is imperative that you speak to your solicitor to ensure that everything is on track to complete before the 31 March.
Of course, there is always the possibility that the Government may extend this deadline, especially for those that are part way through a purchase. However, buyers should not rely on this happening and should therefore focus their efforts on getting the purchase process completed on time.
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