The Chancellor Rishi Sunak announced two initiatives to keep the Thaneeproperty market firing on all cylinders into 2021.

Firstly, the £500,000 zero-rate Stamp Duty band has been extended to the 30^th June 2021. After then it will phase down to £250,000 for an additional three months, returning to the pre-pandemic levels on the 1^st October 2021. Secondly, Mr Sunak announced a scheme that will allow Ramsgate first-time buyers to buy their Ramsgate home with a 5% deposit from this April. Let me look at what each initiative means to the Ramsgate property market.

Coming out of the first lockdown in the early summer of 2020, there was a lot of apprehension that the British property market would flounder. Therefore, when the Stamp Duty Holiday was announced back in July 2020 to boost the property market, the deadline was set at the 31^st March 2021. Little did anyone know of the snowball effect of people wanting to move because of the initial lockdown in the spring of 2020, the pent-up demand following the conclusion of the EU negotiations with the subsequent ‘Boris Bounce’ and then the Stamp Duty Holiday which made the perfect storm for what has been the busiest property market in Ramsgate since 2001/2.

The reason the Stamp Duty extension is important is that many estate agents and solicitors have been warning for the last couple of months that home buyers would pull out of property deals or renegotiate if they could not complete their sale in time before the Stamp Duty Holiday ended.

So, by phasing down the Stamp Duty Holiday, this will allow some breathing space for burdened solicitors and mortgage lenders, thus decreasing the number of buyers pulling out of their property purchase because they unexpectedly have to find up to an extra £15,000 in Stamp Duty when property sales do not complete on time.

So, what does the Stamp Duty extension mean for Ramsgate house prices?

The extension has heightened confidence in the Ramsgate property market. The Government watchdog ‘The Office for Budget Responsibility’, has predicted that house prices in 4 years’ time will be just over 13% higher, compared to the pre-Christmas predicted figure of 11% growth (over the same time frame).

From next month, Ramsgate first-time buyers will be able to buy Ramsgate homes worth up to £600,000 with a 5% deposit and a Government-backed mortgage with a fixed rate of up to 5 years.

Rishi Sunak wants to turn the millennial ‘Generation Renters’ into ‘Generation Buyers’ and believes this initiative should be able to help two million people get on the property ladder. When we look at what that would mean for Ramsgate, I estimate …

The Government backed scheme will be open to Ramsgate first-time buyers for 21 months (until the end of 2022) and available from lenders including NatWest, Lloyds and HSBC (plus others to be announced soon). It will be available on all Ramsgate homes new or second hand (previous schemes applied to new homes only).

5% deposit mortgages were all but withdrawn from the market at the start of the pandemic in spring 2020 with an almost default minimum deposit of 10% (even as high as 15% in the autumn just gone) putting homeownership out of reach for all but the wealthiest Ramsgate first-time buyers.

With so many young families paying huge sums in rent, who could effortlessly afford to make mortgage repayments on the same property, they haven’t been able to save enough for a 10% initial mortgage deposit, let alone 15%.

Yet now with these new 5% deposit mortgages, many Ramsgate first-time buyers will be able to afford to buy their first home in Ramsgate. Banks will typically lend between four and a half and five times the gross annual income – this means with a modest 5% deposit; many Ramsgate 20 and 30 somethings will now be able to buy their first home. Just before I finish this topic, the 5% deposit mortgages will also be available to current Ramsgate homeowners who don’t have the equity built up in their existing home – thus helping second or third (or more) time Ramsgate buyers as well.

I know many of you Ramsgate landlords are adding to your Ramsgate rental portfolio because of the Stamp Duty Holiday and with the extension, you too will save some money from it. The issue of first-time buyer mortgages does mean the demand for private rented accommodation in Ramsgate might not be as strong in the coming decade.

Don’t get me wrong, tenant demand will continue to outstrip supply of Ramsgate rental properties for the foreseeable future, yet the tenant/landlord balance could alter slightly in the medium term. Ramsgate landlords need to take a long hard look at their properties and ascertain if they are fit for purpose both now and into the 2030’s. Tenants are becoming a lot more demanding of what their rental property offers. Wood chip wallpaper, avocado green bathroom suites and kitchens fitted in the 1990’s (or before) simply won’t cut the mustard in the next decade.

The demand from Ramsgate tenants for properties with larger gardens, or the ability to keep pets or an extra reception room garden/office to allow them to enjoy their rented home more and also being able to work from home will ensure greater demand for your rental property … and the best bit, they will pay handsomely for that in higher rent.

If you are a Ramsgate homeowner, buyer, tenant or landlord and you want to discuss your options on selling, buying or renting a property in Ramsgate and the surrounding area, do not hesitate to contact me personally.