The Government’s pledge in February 2021 of an additional £3.5billion to help rectify unsafe cladding on high-rise buildings has been welcomed. Supporting people who find themselves living in a situation impacted by unsafe cladding could not be more important. There is understandably much keenness to implement the initiative quickly.

In the wake of the Grenfell tragedy on the 14th June 2017, the combustible cladding used on Grenfell and on buildings across England was identified as a major fire-safety concern which needed to be rectified.

Government commitments:

Five-point plan to bring an end to unsafe cladding

• Government will pay for the removal of unsafe cladding for leaseholders in all residential buildings 18 metres and over (6 storeys) in England
• Finance scheme to provide reassurance for leaseholders in buildings between 11 and 18 metres (4 to 6 storeys), ensuring they never pay more than £50 a month for cladding removal
• An industry levy and tax to ensure developers play their part
• A world-class new safety regime to ensure a tragedy like Grenfell never happens again
• Providing confidence to this part of the housing market including lenders and surveyors

Housing Secretary Rt Hon Robert Jenrick MP said:

“This is a comprehensive plan to remove unsafe cladding, support leaseholders, restore confidence to this part of the housing market and ensure this situation never arises again. Our unprecedented intervention means the hundreds of thousands of leaseholders who live in higher-rise buildings will now pay nothing towards the cost of removing unsafe cladding.”

It is encouraging to see the government taking the lead as the right place for debating this kind of vital legislation is at a senior government level.  The plan will mean also that surveyors can accurately value properties and that leads to banks being able to support homeowners with the mortgage solutions they need.

Henry Knight, Managing Director of Springtide Capital commented: ‘The measures announced last month will mean people living in homes which they have been prevented from selling, or re-mortgaging, through no fault of their own, will finally be able to push forward. What happened at Grenfell Tower is an absolute tragedy and rectifying the problem with poor cladding on other buildings must be a national priority lead by the government, outlining a clear way forward.’

The government will work closely with industry on the next steps and further details on the scheme will be provided in the coming weeks. There is a huge challenge to be met by the government to bring about the biggest changes to building safety in a generation. The Government is expected to agree the Building Safety Bill this spring.

Sources:

Government to bring an end to unsafe cladding with multi-billion pound intervention – GOV.UK (www.gov.uk)

Chancellor Rishi Sunak has extended the current stamp duty holiday in his budget announcement on March 3^rd 2021, giving a further opportunity for buyers to capitalise on the temporary reduction in rates.

Since 8th July 2020, reduced rates of Stamp Duty Land Tax (SDLT) have applied to residential properties, a measure that was introduced in response to the outbreak of the Coronavirus Pandemic last year. A residential property purchased between 8 July 2020 and 31 March 2021 that was valued at up to £500,000 became subject to a zero charge in SDLT.

This first stage of the initiative was due to expire at the end of March, but the extension represents a staged withdrawal which means:

• extending to the 30 June 2021 the nil rate band of £500,000.
• introducing a nil rate band of £250,000 for the period 1 July 2021 to 30 September 2021

After that the standard zero rate band for stamp duty will revert to its pre-holiday level of £125,000.

Henry Knight, Managing Director of Springtide Capital, said the whole initiative has given a lifeline to the nation’s property market. There are currently around 234,000 house sales that have already been agreed during the Stamp Duty Holiday that have not yet been finalised. Extending the period of a reduction in rates will ensure those sales can go through without the buyers being penalised.

“The reduction in Stamp Duty Land Tax has undoubtedly been instrumental in keeping the property market afloat during this challenging time. We are pleased that the Chancellor has revised the offering, and trust it continues to have a positive impact on mortgages and our clients” he added.

Before the reduction in rates, SDLT was due on any residential property valued at £125,000 or above. Raising the threshold has encouraged both those looking to upsize and downsize, as well as boosting housebuilding. First time buyers previously were given relief on SDLT up to £300,000 and then 5% on the portion from £300,001 to £500,000. The Stamp Duty Holiday has been hailed as a particular success for first time buyers, allowing them to take their first steps on the property ladder. Regionally, the extension on the 3^rd March is set to benefit those living and buying in London and the South-East most, where property prices on average are higher than across the rest of the country.

However, despite the extension, there is an expectation that there could be a sudden increase in new activity, with buyers likely to hit a “cliff edge” further down the line. A second wave of intensive activity may not dissipate the problem of getting all the transactions completed in time and only return the market to the same position it is now, with many buyers waiting to complete.

Henry Knight comments: “I hope the more tapered approach to the end of the holiday will help many avoid the cliff-edge scenario they were facing in the run up to the deadline. The tight deadline was highly stressful for buyers and put a huge amount of pressure on all the individuals involved in getting a house sale completed. Only time will tell if this move will be advantageous, as it will depend on how much new activity will be seen over the next two quarters. I very much hope the problem has not simply been deferred for a few months.”

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources:

https://www.gov.uk/stamp-duty-land-tax

https://www.gov.uk/government/publications/extension-of-the-temporary-increase-to-the-stamp-duty-land-tax-nil-rate-band-for-residential-properties/extension-of-the-temporary-increase-to-the-stamp-duty-land-tax-nil-rate-band-for-residential-properties

Stamp duty holiday ‘to be extended until June in Sunak budget’ (msn.com)

https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

Stamp duty: Holiday extension will benefit buyers ‘most’ in London and South East | Express.co.uk