From 3rd September the stamp duty threshold will be temporarily increased to £175,000 for 1 year, saving homebuyers up to £1,750.
The announcement has at least brought speculation over it’s makeup to a close, but some will still be disappointed the Government didn’t do more.
Lifting the threshold means that around half of all housing transactions will now be free of stamp duty according to the Council of Mortgage Lenders, a figure that could increase if house prices continue to fall over the next 12 months.
The announcement was made as part of a £1 billion package of measures designed to benefit many areas of the housing and mortgage market.
With more uncertainty over jobs, the changes to Income Support for Mortgage Interest will also be welcomed. The waiting time for new claims will be cut from 39 to 13 weeks, and the maximum mortgage that will be met will increase to £175,000, but the changes will not take effect until next April.
Further measures include an extension to the Government HomeBuy schemes, which help first time buyers and key workers get on the property ladder. HomeBuy Direct is a new £300 million scheme which is limited to newly built property, so giving a helping hand to both housebuilders and homebuyers.
Buyers will be offered an equity loan of up to 30% of the property value, free of charge for five years making home purchase more affordable. The loan is made jointly by the Government and the developer, and is in exchange for 30% of the property value when the loan is repaid.
A further £200 million has been earmarked to help the most vulnerable homeowners, those who can no longer afford their mortgage repayments, remain in their home through a mortgage rescue scheme.
Borrowers that are deemed eligible (it’s is estimated there will be around 6,000) will be offered one of three solutions designed to allow them to stay in their property. The options are switching to a shared ownership or shared equity arrangement, or sale and rent back, all of which do have their drawbacks, but could help borrowers ride out these difficult times.