Wales stamp duty cut excludes BTL and second homes
The move does not apply to additional properties including buy-to-let or second home purchases, unlike in England and Northern Ireland, but will end on 31 March.
The rates for higher rate residential or non-residential transactions are unchanged.
Around 80 per cent of homebuyers liable to the main rates of land transaction tax will not pay any tax with an average reduction of £2,450 per transaction, the government said.
It noted that the lower value reflected the nature of the housing market in Wales, where the average house price of £162,000 is considerably lower than the £248,000 in England.
First time buyers typically pay £139,000 in Wales, and £208,000 in England.
The move coincides with the full opening up of the housing market in Wales, which will also take place on 27 July, with viewings of occupied properties allowed to recommence.
A further £30m to support the construction of new social housing was also announced.
Finance Minister Rebecca Evans (pictured) said: “This tax holiday will help first time buyers as well as those selling to move on, but we are taking a different direction to support jobs and house building in Wales.
“While eliminating taxes for those that need extra help, the tax holiday rate also reduces the tax paid on more expensive properties to help the wider housing market.
“Under these changes more than three quarters of homebuyers will pay no tax at all, an increase of 20 per cent under our current measures,” she added.
Summer Statement: Chancellor outlines stamp duty, green homes and furloughed employee measures
Sunak noted that the 25 per cent collapse in the economy since the lockdown began was in effect the reversal of 18 years’ worth of economic growth.
As a result, he noted that the Plan for Jobs would not be the last action in recovering and rebuilding after coronavirus.
The chancellor confirmed the furlough scheme would end in October.
Sunak then unveiled the jobs retention programme for furloughed workers which will see employers paid a £1,000 bonus for each furloughed employee who is still employed as of 31 January 2021.
If all nine million furloughed jobs were retained, it would cost £9bn on the new scheme.
Measures were also announced to help keep young people in jobs with grants for training and apprenticeships.
The Stamp Duty Land Tax (SDLT) cut could cost the government as much as £3.8bn in revenue.
“The government will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000,” HM Treasury said.
“This will apply from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT.
“Nearly nine out of ten people getting on or moving up the property ladder will pay no SDLT at all.”
It estimated that the average stamp duty bill will fall by around £4,500.
The government will fund up to £2bn worth of grants for green home improvements which it hopes will support thousands of jobs and cut energy bills across England.
Homeowners and landlords will be able to claim back up to two-thirds of the cost at up to £5,000, while low income households may receive up to £10,000 to potentially meet the full cost.
A £1bn programme to make public buildings, including schools and hospitals, across England greener and help the country meet its Net Zero ambition by 2050 is also being introduced.
Focus on jobs
Delivering his Plan for Jobs policy speech, Sunak said: “The independent Office for Budget Responsibility and Bank of England are both projecting significant job losses – the most urgent challenge we now face.
“I want every person in this house and in the country to know that I will never accept unemployment as an unavoidable outcome.
“We haven’t done everything we have so far just to step back now and say, ‘job done’. In truth, the job has only just begun.”
He added that house building alone supports nearly three quarters of a million jobs with millions more relying on the availability of housing to find work.
Other measures announced include:
- A £1,000 grant for employers to take on trainees with a tripling of the number of places
- For the next six months businesses will receive £2,000 to hire young apprentices, and a £1,500 bonus to hire apprentices aged 25 and over.
- VAT on goods and services supplied by the tourism and hospitality sectors will be cut to five per cent.
- For the month of August a 50 per cent reduction of up to £10 per head will be offered by the government on sit-down meals and non-alcoholic drinks for Monday to Wednesday.
Failed public health
Responding to the statement, Labour shadow chancellor Anneliese Dodds criticised the government’s response, noting that it’s failure to act on supporting public health was a large contributor to falling economic activity.
She highlighted that a lack of a working test and trace system and other instances and lost public trust in the government and meant people were reluctant to go out and resume their normal lives.
TSB launches five-year fixed mortgage with no ERCs in wake of Covid-19
Developed in response to the financial uncertainties caused by the coronavirus pandemic, the Fix and Flex mortgage is available up to 80 per cent loan to value (LTV) and allows customers to refinance or exit after three years at no cost.
The mortgage will be available for residential remortgage customers from today and from 17 July, will be open to first–time buyers and home movers.
Rates start from 1.99 per cent and the mortgage has no product or application fees.
This product comes as a recent TSB survey on 2,000 Brits showed 40 per cent were worried about their finances since Covid-19 began, and a third were saving more for post-lockdown life.
Roland McCormack (pictured), TSB’s director of mortgages said: “We understand that now, more than ever, people’s circumstances can change. Fix and Flex offers our customers the comfort of a fixed monthly payment with the ability to leave their mortgage deal after three years, without having to worry about an early repayment charge.
“We want our customers to feel money confident and more in charge of their finances when they bank with us and this new product is designed to help them do exactly that.”
Roma Finance expands management team
The position and department were created partly due to the Covid-19 pandemic and to boost Roma’s customer service operations.
Chaplain has been a consultant for the lender for the last three months and has now joined the business on a permanent business.
During the pandemic months, Roma Finance took steps to reorganise its customer services team by redeploying staff members to other departments and contacting borrowers to see if support was needed.
Chaplain (pictured) said: “Being part of the Roma Finance team is a privilege – the company is so people-focused and this is really reflective of the service provided.
“So many customers come back to us time and time again and I am so pleased to be part of the team at this exciting time.”
Scott Marshall, managing director at Roma Finance, added: “I am delighted to welcome Deborah to the team.
“She has already made a significant impact within the company and with the rapid growth of the business, this could not have come at a better time. I have never been more excited about the future of Roma Finance, than I am right now.”
Clydesdale and Virgin Money remind brokers to notify them of borrower changes
The lenders, which are part of the same group, told Mortgage Solutions they had sent a reminder to brokers of its policy to update it if borrower circumstances changed as part of their commitment to responsible lending.
This could include being furloughed, loss of overtime or commission payments, or being made unemployed, the lender said.
“We understand that many peoples’ lives have changed in recent months,” it in a message to brokers.
“As we continue to assess mortgage applications, it’s important that we take into account your customers’ current circumstances.”
It continued: “You must let us know if there have been any changes to a customer’s circumstances since you submitted an application to us.
“Examples of changes could include unemployment, furlough, loss of overtime or commission.
“If things have changed after you have submitted an application, please tell us and we will assess your customer’s current circumstances against our policy at the time of the original application.”
Half of buyers denied mortgages despite having agreements in principle – survey
The survey which was commissioned by Butterfield Mortgages and included people who currently own property or are currently buying.
It showed a third of buyers lost their deposit due to delays in getting a mortgage as a result of the pandemic. A further 52 per cent said challenges around completing a transaction during lockdown had caused them to be stuck in the property chain.
Two fifths of respondents said they had pulled out of buying a property after putting in an offer because of uncertainty around Covid-19 and 13 per cent of homeowners decided against selling their property even though they had received offers.
Also, 16 per cent of homeowners said they had taken advantage of the mortgage payment holiday scheme. An additional 14 per cent said they wanted to use the scheme but had difficulty applying for it through their mortgage provider.
Alpa Bhakta (pictured), CEO of Butterfield Mortgages, said: “The coronavirus pandemic took the property market by surprise.
“The fact that many mortgage lenders withdrew products or stopped accepting applications during the lockdown has clearly had a damaging effect on property transactions.”
“Positively, there are mortgage lenders who are continuing to issue loans and support homebuyers.
“What’s more, as lockdown measures are eased we are seeing activity return to the UK property market – as a result, demand that has been pent up over recent months might be released, resulting in a flurry of transactions in the second half of 2020,” she added.
We’re seeing the first steps of lenders preserving capital – Harris
My internal radar is screaming like a siren though as the mortgage market settles into an early return and lenders calibrate their risk appetites and lending volumes in response.
Positivity is a natural state for the mortgage market; we are a resilient bunch after all and have weathered many a storm in the 15 years I’ve worked in financial services, but the cloud that is overshadowing my naturally positive state feels potentially huge.
This cloud comes from the signals on how our economy and housing market might look next year.
I’ve seen various predictions that the housing market will recover over the next six to nine months, current house prices are holding steady and the pent-up demand from lockdown is working its way through the system.
But six months can be a long time in an unpredictable global crisis.
Employers cutting their cloth
We’ve already started to see the impact of big industries cutting their cloth to survive the pandemic with 600,000 jobs lost in the first few weeks of lockdown and many waiting for the furlough scheme to end before the next wave hits.
This wave is looking likely to be a severe and seismic spike.
The end of the government support schemes will be the turning or breaking point for many businesses of all sizes and the resultant spike in unemployment will be the biggest determining factor on the housing market and lending volumes next year and beyond.
The Institute of Employment Studies has reported that an additional 1.6 million claims for benefits have been submitted since March, the fastest rise since the depression of 1929.
Furthermore, economists are predicting up to 10 per cent of the UK workforce could be unemployed by next year, which is a level we’ve not seen since the mid-90s.
For lenders, the cost of funding and cost of capital are the two foundations which underpin everything they do and one of the biggest risks to both of those things is unemployment.
Consumers have already taken their first steps in paying down household debt, clearing a record £7.4bn of personal loans and credit card balances in April but with one in five workers surviving on reduced or furloughed incomes and unemployment starting to rise, it cannot be long before savings once again become a battle ground for retail banks.
With wholesale funding markets still only tentatively open this will undoubtedly drive up the cost of funds.
Reduced spending and lower personal debt also mean less income for banks, so the funding gap gets squeezed at both ends.
Since the global financial crisis, all lenders have seen intense regulatory focus on capital and risk management to ensure we can withstand another crisis and it is working.
Banks and non-bank lenders are in a much better place than ever before to steer themselves through this, but survival comes at a cost.
Capital buffers are there predominantly to absorb losses and as the unemployment rates and company closures inevitably translate to missed payments then arrears and possessions, managing and protecting capital becomes critical.
Early signs of belt tightening
One of the first steps in preserving capital is usually to reduce new lending either through tightening credit policy, reducing loan to values (LTVs) or lower loan sizes.
It feels like we’re starting to see the early signs of this as higher LTV lending is withdrawn and lenders look to protect themselves and consumers against a future fall in house prices.
I’m not an economist and I don’t have any better insight into the future than the rest of the market, but I am listening to my inner voice and it’s telling me to be prepared for tough times ahead.
We’ve proven before that we are resilient, and this crisis has shown that we can adapt quickly and transform our businesses swiftly when we need to.
So maybe this is a good time to harness those leadership skills and steer a path through whatever storms are coming our way.
Welsh housing market reopens as Scotland plans for next week
From today, people can move home if their sale or tenancy has been agreed but not yet completed and if the property they are moving to is unoccupied and has been empty for at least three days, or it has been deep cleaned. This includes new-build properties.
These moves do not involve different households being inside a property at the same time, so the risk of transmission of coronavirus is lower, the Welsh government said.
Valuations of occupied and unoccupied properties are permitted, but these must take place under safe working conditions.
The marketing of all properties can take place, but viewings are only permitted of unoccupied properties. Potential buyers or tenants cannot view the property in person if it is occupied.
Letting and estate agents can reopen their offices and the Welsh Government’s five-mile coronavirus travel restrictions have also been lifted for the property sector.
Moves across the border into England are permitted, while those moving into Wales, should only move to properties that are unoccupied and have been empty for at least three days or have been deep cleaned.
Scotland and Northern Ireland
Meanwhile the Scottish government has announced that Scotland will relax restrictions on house moves from 29 June.
Estate agents in Scotland have been told to continue preparing their businesses to reopen by looking at staffing levels and implementing social distancing measures in their offices.
Northern Ireland opened its property market last week with several lenders including Santander and NatWest resuming valuations there.
One in six UK mortgages on payment holiday – UK Finance
This means a sixth of all mortgages in the UK are on a payment deferral, 300,000 more than the 1.6 million mortgages which were reported to be on payment holidays in April.
On average, the suspended payments are £755 per month.
Homeowners will soon be coming to the end of the three-month payment period and UK Finance said a range of support was available but advised borrowers who could afford to resume payments to do so as it was better in the long run.
For borrowers who still require assistance, lenders can offer full or partial payment deferrals, a move to temporary interest-only payments or an extension of the mortgage term to reduce payments.
In May, an additional three months were added to the payment relief period and customers who have not yet applied for a payment holiday can do so until 31 October.
UK Finance managing director for personal finance Eric Leenders, said: “Lenders understand that many households will continue to see their finances squeezed as the pandemic continues, and we are working hard to ensure everyone gets the support suited to their needs.
“The industry has a clear plan to help homeowners get through these tough times, and while it is best for customers to restart their payments if they can, where this is not possible lenders are keen to help, whatever a customer’s financial situation.”
Nationwide and Leeds BS offer deferred payment options as lenders renew mortgage holidays
The mutuals have created websites to help guide borrowers through the process with various options being available.
Both lenders emphasised that it was better for borrowers to repay as much as they could afford, and their customers will be directed to calculators to make clear the financial impact of the change as payment breaks will continue to accrue interest.
The moves come as the Financial Conduct Authority (FCA) confirmed earlier this month how the three-month extension to mortgage payment holidays would work for those re-applying and those making their first claim.
While payment holidays will not be reported on credit files, lenders can use them to assess mortgage affordability and many are doing so already.
Nationwide said it was offering new three-month mortgage payment breaks as well as providing the option to make partial payments towards a mortgage.
Its members already receiving payment support will be contacted prior to it ending and directed online.
Additional measures coming before the end of June include extending mortgage payment breaks to buy-to-let landlords.
Nationwide said it is encouraging landlords to apply for the breaks if their tenants are struggling to pay rent due to Covid-19, and where possible to pass on the benefit.
It also reiterated that no mortgage member falling into arrears as a result of Covid-19 will lose their home until the end of May 2021 if they work with the society to get their finances back on track.
Nationwide director of mortgages Henry Jordan said: “Many people are still experiencing financial difficulties as a result of the outbreak and we want to support where we can.
“While we would always encourage people to pay what they can, there are cases where this is just not possible.
“The unknown timeframe of how long this impact will last has led us to halting repossessions linked to Covid-19 until the end of May 2021 to give our members as much reassurance as we can.
“All that we ask is that our members continue to engage with us so that we can agree with them the best way to help them.”
Leeds Building Society has introduced the ability to repay some or all of borrowers’ deferred repayments by lump sum immediately for those who are able to.
The mutual will also be recalculating the monthly repayment, to ensure deferred repayments are spread over the remaining term of the mortgage or giving the option to extend the mortgage term.
It is also waiving any arrears fees until the end of June and will not seek possession of any properties before the end of October, unless the borrower requests it.
Borrowers will be contacted by letter or email at the end of their mortgage payment holiday, which will explain the impact on their repayments and any action they need to take.
It will direct them to the relevant part of the website which will have the latest information and guidance and will direct them to their options.
“While it remains best advice to pay your mortgage if you can, we know some families who’ve taken a payment holiday already will welcome being able to now defer repayments for up to six months,” said Leeds Building Society chief customer officer Jaedon Green.
He continued: “The pandemic is a worrying time for so many people, about their finances and much more.
“We’ve tried to make the process as straightforward as possible for anyone who’s taken a mortgage payment holiday since March or is thinking they may need to in the coming months.
“While we’ll continue to work with any borrowers experiencing longer-term financial difficulties, customers who applied for a mortgage payment holiday as a precaution should be aware the deferral of monthly payments or extending the mortgage term results in additional interest payable over the life of the mortgage.”