As expected, the 11 March 2020 budget brought in some significant changes which affect the lending and mortgage sector, and the wider financial services industry.
Our team of experts have summarised the key issues.
Prior to the budget being read, it was confirmed that Bank of England would slash the base rate from 0.75 to 0.25% due to the coronavirus outbreak. This will reduce the borrowing costs to the lowest level in history. Homes with tracker mortgages should see their rates decrease. Those with fixed rates will see no change.
Points raised in the budget that will impact lenders:
- The government announced that it intends to fully dispose of its Royal Bank of Scotland shareholding, which it has held since 2008, by 2024-2025. This will be subject to market conditions and achieving value for money for taxpayers.
- Government expects to return UKAR’s subsidiaries Bradford and Bingley, NRAM Limited and remaining assets to private ownership in 2020. This is subject to achieving value for money and market conditions remaining supportive.
- Non-UK resident Stamp Duty Land Tax surcharge – a 2% SDLT surcharge will be introduced on non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021. This is to help control house price inflation and to support UK residents to move up the housing ladder. The money raised from the surcharge will be used to help address rough sleeping.
- Government pledged £10.9 billion increase in housing investment to build at least one million new homes per year by the end of Parliament and an average of 300,000 homes by the middle 2020s.
- The government has allocated £1.1 billion from Housing Infrastructure Fund to build 70,000 affordable homes in high demands areas such as Manchester, Sunderland and South Lancaster.
- The government is set to invest an additional £9.5 billion in the Affordable Homes Programme to support the creation of more affordable homes across England and Wales.
- The government has reviewed how it could better support self-employed people applying for mortgages and it will be looking for a way to improve the guidance.