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Budget 2021 - What does this mean for the investor?




The Chancellor of the Exchequer presented his budget to Parliament on Wednesday 3rd March:

  • Mortgage guarantee scheme with 95% mortgages now available (similar to Help to Buy) for all residential purchases, not just first time buyers and properties up to £600k.

  • Universal credit £20 per week increase extended for another 6 months.

  • Corporation tax increase from 19 to 25%, but for businesses with profits under £50k it will remain at 19%.

  • New business recovery loans introduced (80% backed by government, incentivising banks to increase lending)

  • Stamp duty holiday extension extended for 3 months followed by a further 3 month tapering, incentivising thousands more to purchase property before the new deadline.

  • Recent Nationwide report showing annual house price growth now at 6.9%, with London's average house price surpassing £500k for the first time in November 2020, showing just how strongly the property market has bounced back.


Why does this mean for the investor?

With quantitative easing expected to be £895bn by the end of this year, double the amount this time last year and nearly 4.5x higher than the QE of the 2008 financial crisis, coupled with mortgage guarantee schemes, stamp duty holiday extensions and business recovery loans, the stage is set for strong economic growth and a potential boom for the property market.

For property investors, now is an ideal time to expand your portfolio to reap the potential gains and utilise the SDLT extension (up to £500k), with companies with profits not exceeding £50k also able to take advantage of the 19% CT.

For the average investor, with all the inflationary forces at play, holding any form of cash could see your wealth slowly eroding away. With interest rates at an all-time low, saving account customers could lose money as the Bank of England meets its 2% inflation target. If you're considering purchasing property, now is the ideal time to take advantage of the stamp duty holiday extension and mortgage guarantee schemes, locking in potential increases in the market. For smaller sums of money, it's never been easier to invest in stocks and shares through trading platforms such as Trading 212 or Vanguard. With varying risk profiles and the appropriate due diligence, investors can achieve much higher returns by capitalising on the potential economic growth than savings accounts and building societies alone.


DISCLAIMER

Bennett Property Management is not a registered investment, legal or tax advisor or a broker/dealer. All investment/financial opinions expressed by Bennett Property Management are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur. If you are unsure of any investment decision you should seek a professional financial advisor.

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