Stamp duty holiday and 95% mortgage scheme – what the new government incentives mean for young professionals and downsizers

Following the government’s budget announcement which included an extension to the stamp duty holiday and a new 95% mortgage guarantee scheme, property experts have outlined the ways in which young professionals and downsizers can take advantage of these incentives in the housing market.

From extended deadlines, to new opportunities to buy earlier, experts from selling agent FHP Living, and joint developers Monk Estates and Harmony Bridge of The Waterside Apartments – a 121-home iconic waterfront complex on the banks of the River Trent – share intel on what these new initiatives mean for different buyers.

The deadline for the stamp duty holiday is now 30 June, offering homebuyers the chance to avoid paying stamp duty land tax on properties up to the value of £500,000, presenting a considerable potential saving. After the 30 June deadline, the stamp duty holiday will apply to properties up to the value of £250,000 until the end of September.

Fortunately for prospective homebuyers, this unlocks more opportunities in terms of the scale and types of properties available. A two-bedroom apartment at The Waterside Apartments, for example, with floor to ceiling height windows, a Juliet balcony and sweeping views across the river and Nottingham city centre’s skyline is £390,000, and without the stamp duty holiday, buyers would normally need to be pay £4,500 stamp duty tax on this property.

Young professionals, first time buyers and those looking to downsize to a new property can also take advantage of the 95% mortgage scheme, which is due to start from April 2021.

Over the past year, the majority of lenders stopped offering 95% mortgages due to economic uncertainty, and as part of the government’s efforts to bolster the property market following lockdown restrictions, the new 95% scheme allows prospective homebuyers with smaller deposits, the chance to access a range of mortgages that vanished during the pandemic.

To facilitate the scheme in the long term, the government has stepped in to cover some of the risk, by guaranteeing the remaining portion of the mortgage over 80% to the lender, should a new homeowner fail to pay their mortgage. This acts as a safety net to lenders – encouraging them to start offering low-deposit mortgages once again, with many major banks also saying that they will come on board, giving buyers a wider range of deals to choose from.

It means that professionals looking to buy a home close to the city, or downsizers wanting to move to a smaller property only have to put down a 5% deposit, going up to a 9% maximum deposit, on the home of their choice. For a one-bedroom property at The Waterside Apartments, situated within walking distance of Nottingham city centre and the sought-after location of West Bridgford – at a price of £220,000, only an £11,000 deposit would be required.

This is good news for those on the hunt for a new home, as the scheme is open to everyone – not just first timers – on properties that are going to be the buyers’ main residence (i.e. not to let out), up to the value of £600,000.

Director at FHP Living and selling agent for The Waterside Apartments, Steve Parker, said: “The stamp duty holiday extension has been met with great optimism and relief from the property industry and would-be buyers – it allows those on the hunt for a new home, more time to progress with their searches and transactions, presenting the opportunity to make considerable savings in the process.

“That, plus the introduction of the 95% mortgage guarantee scheme from April, has opened up the property market to anyone looking to get on the housing ladder for the first time, or for anyone who wants to move to a new home that is more suited to their current lifestyles following lockdown.

“As a leading estate agent, we are proud to market a number of high-quality residential developments in the Nottingham area, as new homes are continually being built, including The Waterside Apartments, which offer buyers excellent opportunities to save across a range of price brackets.”

Sam Monk, director at Monk Estates, said: “Following an incredibly challenging year for many industries, businesses and the general public, these initiatives will go a long way in keeping the property market buoyant and consistent – supporting the UK economy as a whole and encouraging anyone considering their next property move to take the plunge with these fantastic incentives.

“The Waterside is now fully complete and the uptake and response from buyers and residents has been phenomenal. Prices start from £215,000, and we still have 28 apartments remaining, so we encourage interested buyers to come and take a look at the luxury properties on offer, for a taste of the waterside lifestyle.”