Last week it was announced by Housing Secretary Robert Jenrick that although Lockdown 2.0 comes in to practice on Thursday 5th November, the “UK housing market will remain open throughout this period.”
Following the damaging effects from the first national lockdown, the property sector has narrowly avoided the restrictions this time around, allowing consumers to continue to take full advantage of the Stamp Duty Holiday and find their dream home.
Of course, it was further confirmed that “Everyone should continue to play their part in reducing the spread of the virus by following the current guidance”.
If you are considering taking advantage of the stamp duty holiday, you may think that you have plenty of time. However, the deadline which could save buyers up to £15,000.00 is fast approaching.
According to Zoopla there are 140,000 more people than usual, waiting to complete their property purchase.
The sector is under immense pressure and experiencing severe delays; with some lenders working with a backlog of around 4 weeks before a new mortgage application will even be looked at. The current backlog in conveyancing caused by staff working at a reduced capacity, due to isolation and lockdown, means that the process is taking much longer. This, coupled with a larger volume of buyers and sellers is resulting in long delays.
The stamp duty deadline does not seem as far away when you factor in that the average time that conveyancing firms are taking to complete is around 12 weeks.
The Stamp Duty Threshold has been temporarily increased from £125,000.00 to £500,000.00, causing a surge in transactions. It is estimated that over 300,000 property sales agreed between September 2020 and January 2021 could potentially miss the deadline of 31st March, due to delays in the process.
Some buyers have been holding out to obtain a 95% mortgage, however despite the Downing Street announcement, Lenders are still reluctant to provide 95% mortgages at present.
Lessons have been learned from the 2008 financial crisis; in which mortgages were still offered on a substantial scale to potential buyers with only a 5% deposit. This ultimately led to many defaults on mortgage repayments and property values fell by 20% in just 16 months! We cannot let history repeat itself, and due to Lenders taking this cautious approach, the market should remain somewhat stable well in to the next year.
The stamp duty holiday has been a fantastic move for the market and the economy. Halifax Bank PLC found that the average house price following the first lockdown reached a new record high of £238,000.00 in June 2020.
At Specters we have focused on staff training and expansion to ensure that we are completing matters in a timely manner. Currently, we are completing within the usual time frame of 6-8 weeks despite the boom in house sales.
Occasionally this can vary depending on the complexity of the transaction, however the majority of our purchases which took place in October completed in less than the average time.
Buyers and sellers are urged to act now to ensure that they do not miss out on thousands of pounds worth of savings, when the stamp duty holiday comes to an end on 31st March 2021.