Budget March 2021 – will it help homeowners?

Insulation in the roofspace of a house

Thanks to the coronavirus, no budget was delivered in the autumn but it is hoped that on 3rd March 2021 the Chancellor might deliver a little cheer for homeowners and house builders.

Here are some things that were included.

Mortgage Guarantee Scheme

A new scheme is to be introduced that will mean home buyers can buy a property valued up to £600,000 with just 5% deposit. Most banks withdrew 95% loan to value mortgages at the start of the pandemic, but the new scheme means the Treasury will provide guarantees to lenders to encourage banks to offer higher risk mortgages.

Stamp Duty Holiday

The stamp duty holiday on the first £500,000 of home sales in England was set to end on 31st March but will be extended until the end of June 2021. After that, the nil rate band will be £250,000 until the end of September 2021.

House sales are taking an average 20 weeks to complete, far longer than the previous twelve week average, and the impending March deadline could have resulted in thousands of house sales falling through. Of course the same problem may arise in June.

It is hoped that the extension could address the problem, but some MPs have gone further and called for the tax to be abolished completely.

Green Homes Grant

Poor uptake has been blamed on homeowners’ reluctance to let workers work in their homes and a shortage of accredited tradespeople available to carry out the work in time.

It was estimated this month that it would take ten years for the Green Homes Grant’s targets to be reached. The scheme is due to finish on 31st March 2022 and could well be extended further.

However, the Green Homes Grant was not mentioned in the budget and critics fear it may be withdrawn or replaced – perhaps as early as April.

National Retrofit Policy

The Federation of Master Builders has called for the introduction of a long-term National Retrofit Policy that underpins the government’s Energy White Paper.

The FMB says that 85% of the 28 million British homes will still be in use in 2050, many of which are energy inefficient. An estimated 20% of carbon emissions come from our homes which the organisation says could be retrofitted by homeowners to reduce energy demand and deliver carbon targets.

However, the opportunity to lower VAT on property retrofits was not taken up in the budget.

Help to Build Equity Scheme

The National Custom and Self Build Association (NaCSBA) has campaigned for a Help to Build Equity Scheme for two years, along the lines of Help to Buy. A Help to Build scheme was included in the government’s November 2020 Spending Review but details are yet to emerge. A pledge of financial support for self builders has been given, which includes the finance of new equity loans for the delivery of Help to Build.

It was possible that the budget might provide more details of the scheme and when it might be launched, but that didn’t happen. However, in February it was confirmed that funding would be provided this year, including £150 million over four years to support Help to Build.

Heat and Building Strategy

Details of the Heat and Building Strategy are due to be announced as part of the government’s plan to achieve net zero carbon emissions by 2050, and will include targets for the installation of heat pumps in homes.

Clean Heat Grant

The Renewable Heat Incentive will be replaced by the Clean Heat Grant, potentially letting households claim up to £4,000 for the installation of heat pumps. Consultation into the grant continued until 5th March, so wouldn’t be reviewed until after the budget.