The chancellor’s new budget on 3 March revealed a few financial measures to help revitalise the UK economy after the impact of the pandemic. Most notably for first-time buyers in England and Northern Ireland are the introduction of the Guaranteed Mortgage Scheme and the extension to the stamp duty holiday; the latter of which is likely to be most appreciated by existing homeowners moving house, but also first-time buyers at the higher end of the property market.

What is stamp duty?

Officially known as Stamp Duty Land Tax, it is essentially a tax paid on the purchase of property.

Like income tax, stamp duty has tiered tax rates. Under the current stamp duty holiday, all sales up to £500,000 will be subject to 0% fees, meaning if you buy a house under that amount, you won’t have to pay any stamp duty.

This stamp duty holiday has been extended to 30 June 2021, making it cheaper to purchase property, as a first-time buyer or otherwise.

Even when the stamp duty holiday ends, first-time buyers will revert to paying no stamp duty on properties up to £300,000, which is an existing relief measure from November 2017.

How do you pay stamp duty?

If you manage to complete your property purchase (up to £500,000) before 30 June 2021, you won’t have to pay any stamp duty. Even after the deadline, first-time buyers won’t have to pay any, up to a property price of £300,000.

If you find yourself outside of the holiday’s criteria, your solicitor will handle the payment.

That said, you are still legally responsible for paying any due stamp duty and you have 14 days from the property purchase to make payment and submit a Stamp Duty Land Tax Return. The return must be completed regardless of whether you’re paying or not. You can find details about this on the official government website.

Will I have time to buy before the deadline?

Property purchases are taking longer than usual, thanks to lockdown restrictions, a surge in transactions, work backlogs, and all the logistical constraints we’ve become accustomed to. Local councils are reporting that there are significant delays to conveyancing searches and, according to ThisIsMoney, the average time between offer acceptance and exchange is over three months.

The holiday extension is certainly good news for buyers already part-way through the transaction and if, you’re quick, there could be time to get a new transaction through in time.

Preparing to take advantage of the stamp duty holiday

Most buyers looking to take advantage of the extended stamp duty holiday will do so by applying for a mortgage.

If your deposit is 5% of the property value, giving you an LTV of 95%, you may be eligible for the new Guaranteed Mortgage Scheme, which was also announced in the same budget briefing.

Regardless of your LTV, you can still benefit from the stamp duty holiday if you do so in time.

Before applying for a mortgage, it’s important that you check your Credit Report for yourself, as it holds the data that lenders will use to determine your creditworthiness. Lenders use this information to decide whether you seem a reliable borrower that they’d happily extend a mortgage to, or whether you’re a risky borrower with a history of missing payments or other entries that cause concern. Put simply, the more creditworthy you appear, the more reliable you seem to mortgage lenders, increasing your chances of a successful application.

Because your Credit Report data is so important, investing the time to monitor it can help ensure you’re well positioned before submitting the mortgage application. You can rest easy knowing you’ve seen everything that a lender will see, and that you’ve taken the opportunity to correct any errors which – while rare – do happen.

It’s no good leaving checking your Credit Report to the last minute, as it typically takes lenders around six weeks to correct any errors they may have made. Check it early and monitor it all the way through the application process to ensure you don’t get any nasty surprises that could upend your application. It’s also worth checking your Credit Report regularly after the mortgage application too – as you’ll be able to make sure your lender is correctly reporting your mortgage information to the Credit Reference Agencies.

How do I check my Credit Report?

When you apply for a mortgage, the lender may perform a credit check using any one (or more than one) of the Credit Reference Agencies (CRAs). As there are multiple CRAs, it’s worth checking your data with them all to ensure you don’t miss anything important.

checkmyfile makes this process quick and easy by gathering your information from Equifax, Experian, TransUnion, and Crediva, all onto the same, easy-to-use online platform. If you have any questions or need help disputing some of the information, our Expert Help is just a click away. We can even dispute information directly with the Credit Reference Agencies on your behalf, should the need arise.

If you haven’t already, you can view our Multi Agency Credit Report free for 30 days, then for just £14.99 per month. Cancel online whenever you like, with no fuss.