Chancellor Rishi Sunak today used his 2021 Budget to announce a series of initiatives, including an extension of the SDLT holiday and a new scheme to support lenders in providing mortgages with 5% deposits for potential buyers. These are among a number of policies aimed at assisting the housing sector with the continued effects of the COVID-19 pandemic.

Susie Rogers, Ben Jeffrey and James Arronson set out a summary of the key items from today’s Budget below.

Extension to furlough scheme

The Chancellor has confirmed the extension of the furlough scheme until the end of September. The government is to continue to pay 80% of workers’ wages on the scheme until July. Employers will then be expected to contribute 10% of the workers’ wages with this rising to 20% for August and September.

This is good news for residents – and also for housing providers, as the end of the furlough scheme could have meant an increase in rent arrears for some organisations. The announcement will also give funders further confidence, following Moody’s recent confirmation that the impact of rising arrears in the sector is expected to be minimal.

Universal Credit

The increase in Universal Credit of £20 per week will continue for another 6 months. Housing associations will welcome this as a lifeline for many residents. In particular, the G15 have been campaigning to keep this additional £20 per week, arguing its cancellation could take £1.2bn out of the sector and leave RPs struggling to deliver their business plans, so this will come as welcome news for many. However, with the number of people claiming universal credit in the UK doubling since the start of the pandemic, many are questioning if this is enough to support some of the most vulnerable people in our society.

The extension of the SDLT holiday

The SDLT holiday on values of up to £500,000 has been extended to the 30 June. There will be a further extension of an SDLT holiday on values up to £250,000 until the end of September. On the 1 October the SDLT free band will return to the usual £125,000.

It is important to note that this extension only applies to private residential purchases (please note that first time buyers outside of this policy already enjoy an increased SDLT free band to £300,000) so will not benefit housing associations directly in their acquisitions. However, the extension is expected to continue to stimulate activity in the residential market by increasing the number of sales and is hoped will prevent the effects of COVID-19 on a potential housing price crash.

Mortgage guarantee scheme

The expected mortgage guarantee scheme has confirmed with the government to guarantee mortgages were borrowers can only afford 5% deposits. The government has confirmed a list of national lenders who have signed up to this scheme. The limit of the house values that this will be available for has not been confirmed but was previously rumoured to be £600,000.

This is expected to encourage first time buyers in particular, adding extra stimulus to the residential market.

Other policies confirmed

Other key points confirmed which could indirectly affect the sector are:

• National living wage increased to £8.91;
• A new infrastructure bank with £12 billion of capital will be set up, with duties including to improve infrastructure in rural areas; and
• Personal income tax allowances to be frozen at £12,570 from 2022 to 2026.

How Capsticks' can help

Capsticks’ housing team provides a truly full-service to over 200 registered providers, with particular expertise in development, corporate and securitisation, housing leasehold and asset management. If you have any queries around what's discussed in this article or the Budget itself and the impact on your organisation, please speak to Susie Rogers, to find out more about how Capsticks can help.