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How Much is The Government Supporting UK Property Prices?

Peter Hemple Reports

Compared to previous years, one month in 2020 is the equivalent to one year during the pre-pandemic era. So much can change so very quickly at the moment. For example, just one month before writing this article, the Centre for Economic and Business Research (Cebr) was forecasting that unemployment in the UK was going to soar by 1.2m people (35% of the 3.6m furloughed workers), when the furlough scheme expired at the end of October.

The good news is that this did not happen. The bad news, well where do you start? The number of cases and deaths caused by Covid-19 has soared in the UK in the past month and England has just gone into another national lockdown, this time for (at least) four weeks.

As a result, the furlough scheme has now been extended for another five months, until the end of March 2021, with employees receiving 80% of their current salary for hours not worked. Similarly, support for millions more workers through the Self-Employment Income Support Scheme (SEISS) will be increased, with a grant from November to January calculated at 80% of average trading profits, up to a maximum of £7,500.

When making the announcement on 5 November, the Chancellor of the Exchequer, Rishi Sunak, said: “I’ve always said I would do whatever it takes to protect jobs and livelihoods across the UK - and that has meant adapting our support as the path of the virus has changed. It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is
why we have decided to go further with our support. Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.”

Numerous other support packages were announced at the same time, including an extension of the mortgage and consumer credit payment holiday. The government stated: “Mortgage payment holidays will continue to be available for homeowners in the UK. Borrowers who have been impacted by coronavirus and have not yet had a mortgage payment holiday will be entitled to a six-month holiday and those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file. Payment holidays will also continue to be available for consumer credit products such as personal loans and car finance.”

While as many as 8.9m people were furloughed at the peak of the scheme in May this year, the second lockdown is not expected to be as stringent as the first, with schools staying open and sectors such as manufacturing and construction and the property market expected to continue operating. This means that fewer jobs should be furloughed this time around, compared to the first nationwide shutdown.

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