Budget 2021

The most important Budget of a generation? Well, we hear this a lot and may have been sold this line off the back of Brexit too however the fact remains that tomorrow’s Despatch Box speech will be a crucial one.

The Covid pandemic is still very real however most of us a reconciled that the UK vaccination progress is a success so far and is aggressively diminishing the virus and indeed its threat – especially to the vulnerable in society. Talk then, of course, turns to economic recovery. This falls into two camps – how to stimulate GDP growth and consumer spending; and how to recoup the £300bn that Rishi Sunak has borrowed to stave off the worst effects of the pandemic fiscally.

Tomorrow, I suspect we will see much more of the former than the latter. More stimulus and intervention rather than blatant tax rises. In so far as tax-take, Rishi will at some point no doubt face the wrath of the Conservative back benches and indeed their middle-England base as he starts to squeeze corporation tax, income tax thresholds, CGT etc to recoup monies enough to start to pay off our indebtedness. But that’s for another time and another blog, probably.

In terms of stimuli, we expect to see a three month extension to the stamp duty holiday – pushed out to the end of June so saving 100,000 more buyers an average of £4000 in duty but up to a maximum of £15,000 assuming the rule changes of the last few months prevail.

Another property related initiative is the expected introduction of a mortgage deposit guarantee scheme – or ‘Boris Mortgages’ as we are calling them. In essence, buyers pay just a 5% deposit on any purchase up to £600,000 with the Government (also read tax-payer) providing a guarantee to lenders for around 20% of their exposure. This scheme is not thought to be confined just to first time buyers nor to new homes only. It’s a ‘free for all’.

Our belief, also given the continuing low cost of money in Bank of England and mortgage rate terms, is that the Government’s interventions will fuel further house price rises and transaction growth during most of 2021. Yet, some would-be first time buyers may be perplexed that the further consequence of these measures will be to price them further out of the market as house prices rise further.

I suppose that Boris and Rishi are damned if they do and damned if they don’t really. Yet, for our growing number of property clients, anything that assists a buoyant housing market and its related commercial sectors, is bound to be welcomed by them and their clients.

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