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Stamp Duty Holiday End Means Buyers Need a Plan B

The upcoming end of the stamp duty holiday in its current format could lead to a significant increase in the number of chains collapsing and means agencies, now more than ever, need to have contingency plans in place.

That is the warning from chain repair experts HBB Solutions, which says agents need to have a clear plan B if things start to go wrong.

The stamp duty has undoubtedly boosted and sustained the market since it was introduced back in July 2020, but the first stage of its phased-out approach is set to be reached at the end of this month (June 30).

At present, any home worth up to £500,000 is eligible for the stamp duty holiday, but after June 30 the nil rate threshold will drop to homes worth up to £250,000 until September 30. From October onwards, the nil rate threshold will return to its pre-stamp duty holiday level of £125,000.

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HBB Solutions has been in touch with some of the high street’s major lenders on their cut-off dates for receiving a Certificate of Title (COT) in order to complete on a mortgage by month end.

HSBC/First Direct                                         21 June 2021

Leeds Building Society                                23 June 2021

Halifax                                                            23 June 2021

Barclays Bank                                                23 June 2021

Precise Mortgages                                       25 June 2021

Meanwhile, Nationwide/The Mortgage Works has provided no deadline, but have said they will need five working days to send the funds by BACS and if the notice is less, they will deduct £20 for the CHAPS payment.

This effectively means anyone relying on mortgage funding has about a week left for their solicitor to complete their work, so the lenders can get the COT next week and release funds in time to beat the deadline.

This, in turn, means there could be many buyers and sellers, relying on the significant stamp duty savings they could make, pulling out late on and leading to the unfortunate but all too common situation of a chain collapsing like a pack of cards.

However, there are ways agents can prevent long chains and fall-throughs from disrupting their business, HBB Solutions insists.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Chris Hodgkinson, managing director of HBB Solutions and a former agent himself, said: “We all know how frustrating it can be when chains collapse. We’ve been fixing them for nearly 11 years now. We typically buy with a discount or alternatively charge a fee, starting from as little as 8%, for our service. But that cost doesn’t have to be absorbed by just the one seller, it can be negotiated across the entire chain to make if affordable and keep the sale of every house together. Even if a sale falls through only days away from completion, we’re here to help and get it back on track.”

Fall-throughs and chains breaking down – how big a problem is it? 

Data earlier this year estimated that one in four sales fall through before completion, costing homebuyers an average of £2,700 each time.

Research from property platform WiggyWam found that, in total, property transactions that fall through are costing UK homebuyers a massive £607m every year.

And there are fears that this number will inevitably rise further as the stamp duty holiday gradually comes to an end in two blocks.

On average, nearly a quarter of am (225,000) fall-throughs occur each year in the property market, costing buyers, sellers and agents alike.

There are a number of different reasons for property sales being cancelled before completion, which typically include mortgage issues, gazumping and gazundering, conveyancing delays, problems revealed in the survey, and broken chains.

Sales that are part of a chain – which is most sales – are especially vulnerable to fall-throughs, as it only takes problems with one part of the chain to cause major issues for everyone else. In particularly long and complex chains – it is not unheard of for four or five sets of buyers and sellers to exist in a chain – the chances of fall-throughs and complications are naturally much greater.

It seems highly likely, given the extraordinary levels of demand at play in the property market right now, that the one-in-four statistic – which others elsewhere have previously suggested is as high as one-in-three sales collapsing – will increase by the end of the year.

“I think we all know the pressure lenders, solicitors, search providers and, in particular, agency sales progression teams will be under in June,” Hodgkinson continues.

“We’re standing by and have our lawyers, resource and, quite importantly, cash funds all in place. We can give you a purchase price within just a few hours and provide a same day completion if it is required. If you have a chain That is not on track, then talk to us, we’re here to help.”

HBB Solutions believes that, even once the two-stage stamp duty holiday has ended, there could be issues with buyers walking away from a sale because they will no longer benefit from the stamp duty saving. In turn, sellers may be less likely to list – or withdraw their home from the market – if they start to panic about demand falling off a cliff.

What is the solution? 

As the old saying goes, failing to prepare is preparing to fail, and HBB Solutions believes that agents need to partner with a firm that can offer alternative solutions to be ahead of the game if the worst comes to the worst in terms of more chains collapsing.

One estate agent partner HBB Solutions is already working with has championed the merits of having a chain repair plan B at its fingertips.

Simon Bradbury, managing director of Thomas Morris, comments: “We find the service and proposition that HBB provide is excellent! In the highly competitive market in which we currently operate, it is increasingly challenging to come up with a genuine and compelling USP to entice prospective sellers.”

He adds: “The HBB proposition is a great ‘insurance policy’ when a chain collapses or a seller needs a guaranteed sale.”

Meanwhile, Relocation Agent Network (RAN) – a national network of estate agents specialising in relocation – has been recommending the services of HBB to its membership for more than two years now.

Mark Westcott, director at RAN, said: “We were impressed by the proposition and the team behind HBB and they were by the quality of the estate agents that make up RAN. The introduction of HBB to the membership has led to many successful deals completed as a result. Our members are now able to market HBB’s services to potential vendors as another option if needed, giving them a competitive edge, as well as promoting a part exchange offering to local developers for any sites they have that don’t have access to that service.”

The remainder of this month is likely to be incredibly busy for agents, conveyancers, surveyors and removal firms, Hodgkinson adds, and then again in the lead-up to the end of September.

Given the pressure on the system, it seems almost certain that there will be a rise in the number of chains collapsing and the number of transactions falling through, and it will be those agents who have an adequate plan B in place who will be best set to cope.

BY PETE CARVILL

Source: Property Wire

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How will the housing market fare after the stamp duty holiday?

The housing market has come a long way since the country entered its first lockdown more than a year ago.

In mid-May last year the housing secretary lifted the freeze on home moves in England – which for seven weeks had been prohibited unless “reasonably necessary” – with Scotland and Wales following a month later.

After the chancellor announced a stamp duty cut in July to “catalyse the housing market and boost confidence”, the market has seen average house prices and mortgage borrowing hit record highs.

But how will the market fare when the current stamp duty holiday ends on June 30?

April slowdown

Statistics show a fall in mortgage borrowing and transactions in the month after the stamp duty holiday was originally due to end.

The latest figures from the Bank of England show mortgage borrowing fell in April, with net borrowing at £3.3bn – down from the record of £11.5bn in the previous month, and lower than the monthly average of £5.7bn borrowed in the six months to February.

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And provisional figures from HM Revenue & Customs show residential property transactions dropped to an estimated 111,260 in April, down by more than a third from 173,410 in March (non-seasonally adjusted).

House prices, meanwhile, rose in April, with Nationwide’s index showing prices were up by 2.1 per cent month-on-month, to reach an average of £238,831.

The building society’s chief economist, Robert Gardner, says the extended tax relief prompted a “re-acceleration” in April, after the previous month saw a slowdown in house price growth in view of the original stamp duty holiday deadline.

However, Tim Bannister, property expert at Rightmove, expects market activity to remain strong for at least the rest of the year, despite the tapering and end of the stamp duty holiday in June and September.

Bannister says: “Right now many of the homes in the huge pipeline going through will not be expecting to make the June stamp duty deadline.”

Homebuyers who miss the June deadline for the stamp duty holiday will see the tax kick in above £250,000 of the property price until the end of September, in place of the current nil rate band of £500,000.

However, last month, a survey of more than 1,000 homebuyers by estate agent Barrows and Forrester revealed four in five (81 per cent) said they expected to miss the September deadline for the £250,000 threshold.

Coming out of lockdown

John Phillips, national operations director at estate agency group Spicerhaart, says the reopening of the hospitality and travel industries will have a greater impact on the market than the end of the stamp duty holiday.

Phillips says: “Buying a house will still be a priority for many, but there will be lots of people booking holidays after a year stuck in the UK and savings may be spent on a few weeks in the sun. This may result in a few people deciding to put a purchase on hold as the UK reopens fully.

“The slight dip in buyers will reduce the rate that house prices are increasing. However, this is a positive for the market, as the record increases were unsustainable long-term.”

Nationwide’s latest index shows annual house price growth reached a double figure of 10.9 per cent in May, the highest level recorded since August 2014.

Right now many of the homes in the huge pipeline going through will not be expecting to make the June stamp duty deadline.

Tim Bannister

Buying agent Henry Pryor also says a predicted increase in supply will help to moderate prices.

A record one in three properties (32 per cent) sold for more than the original asking price in April, according to NAEA Propertymark, compared to the previous record of 19 per cent in May 2014.

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Pryor says: “I expect supply to pick up as people start to be more confident about having strangers around their home. This will provide more choice for those wanting to buy and act as a slight dampener on prices.”

Although the housing market has remained open throughout subsequent lockdowns, government advice on moving home in England, for example, recommends homeowners vacate their property during viewings to minimise unnecessary contact.

Meanwhile, government figures show three-quarters of the adult population have had their first Covid-19 vaccine as of June 1.

Beth Rudolf, director of delivery at the Conveyancing Association, also says prices may experience a short-term “blip”, as more properties come onto the market when Covid restrictions are fully lifted and demand drops with the tapering of the stamp duty holiday.

Rudolf added: “As people decide to move to suit their new working arrangements, we might also expect more supply.”

Demand for space to continue

A survey of employers from professional body CIPD found two-thirds (63 per cent) planned to introduce or expand the use of hybrid working, as working from home became more commonplace last year.

Phillips says: “The shift to homeworking has increased the need for an extra bedroom to use as a study, or a garden to build an office in.

“There’s also been a trend away from city centres. Without the need to live in commutable distance from the office, people are moving to larger properties away from the often more expensive cities.”

Indeed, research from Nationwide in April found seven in 10 homeowners (68 per cent) would still be moving, or considering a move, if the stamp duty holiday had not been extended.

Buying a house will still be a priority for many, but there will be lots of people booking holidays after a year stuck in the UK and savings may be spent on a few weeks in the sun.

John Phillips

Nationwide’s Gardner added that shifting housing preferences after Covid was continuing to drive activity. Three in 10 actual and potential homemovers (28 per cent) cited a desire to access garden or outdoor space more easily, and one in five (22 per cent) to escape from a busy urban environment.

Although the country awaits the fourth and final step out of lockdown, buying agent Pryor does not think the demand for more space instigated by the lockdowns will change in the short-term.

Pryor says: “People who can move are looking for more flexible space; room to entertain, to homeschool, to work from home and if we aren’t able to go abroad, to spend the holidays in.

“This is a trend that I expect will continue for the next few years as we start to appreciate the changes brought by the pandemic.”

Kate Davies, executive director at the Intermediary Mortgage Lenders Association, says that while demand may soften following the stamp duty holiday, they do not anticipate a “cliff edge drop” in interest.

Davies says: “Many people are still keen to move irrespective of the holiday, with the Covid crisis having led people across the UK to reconsider their living arrangements.

“It does not seem logical that this trend will suddenly disappear, given the signs that there is still considerable demand in the pipeline, especially among those waiting for price growth to slow, but also from people who have chosen to wait for lockdown restrictions to ease before pressing ahead with a move.”

By Chloe Cheung

Source: FT Adviser

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Factors that impact the UK property market in 2021

It is absolutely fair to assume that 2021 will have its fair share of uncertainty, especially concerning the property market in the UK. In 2020, when Covid-19 came into being, the housing market and the real estate market in the UK and all over the world were severely impacted. While we have seen many government schemes come into play to boost the real estate market and the economy as a whole, no expert can predict with any amount of certainty what the future of the UK property market holds. However, here are some important factors that will have an impact on the UK property market in 2021.

Stamp duty holiday

After the first lockdown, the government introduced the stamp duty holiday in July 2020 in the UK. The stamp duty holiday was a temporary suspension of the stamp duty that needs to be paid by the buyer when he or she purchases real estate. The government announced the stamp duty holiday to boost the buyer’s confidence, revive the real estate market and make housing slightly affordable. Due to its enormous success, the stamp duty holiday has now been extended till September 2021. Whether the government decides to further extend this temporary suspension on stamp duty and how the real estate market will react to the suspension or introduction of stamp duty will have a huge impact on the real estate market in the UK.

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Change in buyer demand

As more and more people have started working from home, there has been a significant shift in buyer demand and the priorities of the buyer. Earlier, potential buyers would look for properties in the city centre which are close to their place of work. Now, homeowners and potential buyers have started looking at properties in the outskirts and the boroughs. One reason is that homeowners and professionals are looking to shift into bigger places as they wish to improve their standard of living since they are not spending more time at home. Secondly, the average price of the property in the suburbs and boroughs is relatively cheaper than in the city centre, which allows homeowners and potential buyers to purchase spacious properties at affordable prices. Also, there has been an increase in demand for properties with spare bedrooms, maybe an outhouse or a garage space, to convert these spaces into work from home offices. This change in buyer demand will certainly play a big role in the future of the real estate market in 2021.

Low deposit mortgages

Earlier, it was very easy for first-time buyers and potential investors to get low deposit mortgages. However, due to the uncertainty of Covid-19 and the increase in unemployment, banks and lenders have drastically reduced the availability of low deposit mortgages, to a point where it barely exists in today’s lending market. However, the UK government has announced a mortgage guarantee scheme under which buyers and investors will be able to secure a mortgage by paying only 5 per cent of the deposit. Low deposit mortgages will have a great impact on the future of the real estate sector. If this scheme leads to an increase in the demand for housing and helps revive the property market, then it will be a game-changer for the real estate industry as well as for lenders and banks.

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Change in the average price of property

What factors affect the price of property? First and foremost, the supply and demand of real estate and housing will play a big role in deciding the price of property in certain areas. Secondly, the availability of mortgages and the rate of interest will play a role in the number of properties that are actually sold. Due to the uncertainty around Covid-19, banks and lenders became very strict about their lending criteria, which took a toll on the housing market. And, the criteria started becoming stricter, the number of mortgages in the market started to fall, hence, there was a significant change in interest rates. Inflation and unemployment also play a big role in deciding the average price of property, as inflation rates and unemployment rates affect the economy as a whole. And of course, political uncertainty caused by Brexit also took a toll on the real estate sector. Therefore, multiple factors, such as the ones listed above, play a big role in determining the property’s average price, which will ultimately impact the UK real estate industry.

Source: News Anyway

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Value of UK house sales to jump 46 per cent this year but London lags behind

The total value of UK house sales is set to reach £461bn this year, a 46 per cent jump on 2020, according to new data.

Property website Zoopla predicts that the current housing market boom is likely to surge to its busiest rate for 14 years.

The forecast comes after data last week showed that UK house prices rose by 10.2 per cent in March, its highest growth rate since August 2007, before the financial crisis hit.

The unprecedented growth has been fuelled by an extension to the stamp duty holiday and new government guarantees for mortgages.

Zoopla said that it expects house sales to reach 1.52m this year, which would put 2021 in the top 10 busiest years since 1959.

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London lags behind

Demand for family homes is diverting buyer interest away from London, with interest in properties in Wales and Yorkshire surging.

London continues to trail when it comes to house price growth at 1.9 per cent, the slowest regional rate across the UK for the sixth consecutive month.

Homes are taking just under two months to sell in inner London, two weeks longer than the 2017 to 2019 average.

Four central London boroughs are registering price falls for a third month in a row, including the City, Westminster, Kensington & Chelsea, and Hammersmith & Fulham.

These areas have been particularly affected by the shutdown of business due to the pandemic.

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The capital ‘will recover’

Despite London’s declining dominance in the housing market, analysts believe the UK’s city centres will recover and thrive as workers return.

“The pandemic has pushed London to the bottom of the house price inflation league, but as we face into what seems to be a solid recovery, there can be little doubt that it will soon be gaining places and rising up the table,” said John Eastgate, managing director at Shawbrook Bank.

“With solid fundamentals underpinning the property market even after the end of the stamp duty holiday, there’s a strong argument to suggest that our cities, London in particular, represent good value today for both homeowners and investors.”

By Damian Shepherd

Source: City AM

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Stamp duty holiday has triggered 22% spike in transactions

The stamp duty holiday has triggered a 22% rise in monthly property transactions, equivalent to more than 171,000 extra sales, according to Search Acumen.

The current tax holiday triggered a 7% rise in house prices between June 2020 and February 2021, adding £17,265 to the price of the average home in England.

This rise has more than offset the £2,572 savings made on the average property.

An average of 103,724 residential property transactions have occurred each month across England and Northern Ireland since the tax break was first introduced in 2020, up 22% from the 84,691 average in the 12 months to March 2020, before the first lockdown stalled the market.

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Since the measure was introduced, 171,303 extra deals have taken place compared to the pre-COVID period in 2019/20.

Search Acumen’s analysis shows the stamp duty holiday of 2008/09 in the wake of the financial crisis saw an average of 60,048 transactions per month.

This was down 27% from the previous 12-month average of 82,378 monthly residential property transactions.

Higher transaction volumes during the current holiday could be partly attributed to lending conditions being more favourable than in the aftermath of the financial crisis.

Strong credit availability has helped property transactions progress despite pandemic-induced disruption to the economy, with the tightening of credit mainly concentrated in the high loan-to-value (LTV) segment of the mortgage market.

Prospective buyers have been able to access relatively cheap medium and low LTV mortgages to finance home purchases during the current stamp duty holiday.

In contrast, homebuyers suffered from lenders pulling back from the mortgage market during the Credit Crunch in 2008/09.

The impact on average property prices during the two stamp duty holidays has also differed significantly.

Since the current holiday was introduced, house prices in England have jumped 7% to £268,291 from £251,026.

For comparison, the stamp duty holiday of 2008/09 saw house prices in England fall 2% to £174,136 in December 2009 from £177,232 in August 2008.

Andy Sommerville, director at Search Acumen, said: “This analysis suggests the property market has been far more responsive to intervention compared to the post-financial crisis holiday.

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“The housing market’s strong performance compared to the wider economy highlights the contrast between the current healthcare crisis and its economic impacts, and the 2008/09 crisis which was rooted in financial markets.

“While many households have absorbed income hits and face greater job insecurity, the UK’s financial system has held up reasonably well since the onset of COVID.

“Lenders did pull back from the mortgage market in the early stages of the pandemic, but the flow of credit has gradually picked up as banks got to grips with the crisis.

“As a result, financing for house purchases has been in reasonably good supply and worked in tandem with the stamp duty holiday to generate a level of activity not seen for a decade, despite the unprecedented challenges of COVID-19.

“However, giving extra support for buyers has had many challenging consequences, from pushing up house prices and negating the average saving to heaping a heavy workload on time-pressured conveyancers.

“Property lawyers have been working around the clock to get people into their homes before the initial 31 March cut off.

“The conveyancing workload is unlikely to get any lighter given the holiday is now running until June and tapering through to September.

“In the long term, the industry needs to put conveyancing capacity – not to mention mental wellbeing – at the top of the agenda given the pressure law firms have been under to ensure clients complete on time.

“It is clear the traditional way of performing due diligence on transactions is getting in the way of efficiency, and we need to pivot quickly to digital, data-led solutions that can improve the experience for homebuyers and their advisers.”

By Jake Carter

Source: Mortgage Introducer

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Stamp duty holiday extended in the Budget ‘re-accelerates’ house prices

House prices in April saw their biggest monthly rise in 17 years after the stamp duty holiday was extended in the Budget.

According to Nationwide’s house price index, published today (April 30), prices rose by 2.1 per cent in April, after taking account of seasonal effects, marking the biggest monthly rise since February 2004.

Annual house price growth rebounded to 7.1 per cent in April, up from 5.7 per cent in the previous month.

The average price of a property reached a new record high of £238,831 – up £15,916 over the past 12 months.

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Robert Gardner, chief economist at Nationwide, said: “Just as expectations of the end of the stamp duty holiday led to a slowdown in house price growth in March, so the extension of the stamp duty holiday in the Budget prompted a reacceleration in April.

“However, our research suggests that while the stamp duty holiday is impacting the timing of housing transactions, for most people it is not the key motivating factor prompting them to move in the first place.

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“For example, amongst homeowners surveyed at the end of April that were either moving home or considering a move, three quarters said this would have been the case even if the stamp duty holiday had not been extended.”

Jason Tebb, chief executive of property portal OnTheMarket, described the monthly and annual rises as unsurprising, with most towns and cities seeing “critically low” levels of homes available for sale and buyer demand “continuing to surge”.

Tebb added: “We would certainly anticipate that the current buoyant market is likely to continue throughout the summer and there is an optimism that, with lockdown measures now beginning to ease, those who were previously concerned about listing their property for sale and accommodating viewings are now more confident, given the huge success of the Covid vaccination programme.”

By Chloe Cheung

Source: FT Adviser

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House prices up by greatest margin since 2004

House prices rose by 2.1% in April 2021, representing the greatest monthly increase since February 2004, according to the Nationwide house price index.

House prices have reached a new record average high of £238,831, up £15,916 over the past 12 months.

On an annual basis, house price growth rebounded to 7.1% in April, from 5.7% in March.

Nationwide suggested that annual growth in house prices could reach double digits in June if prices are flat over next two months.

Robert Gardner, chief economist at Nationwide, said: “Just as expectations of the end of the stamp duty holiday led to a slowdown in house price growth in March, so the extension of the stamp duty holiday in the Budget prompted a reacceleration in April.

“However, our research suggests that while the stamp duty holiday is impacting the timing of housing transactions, for most people it is not the key motivating factor prompting them to move in the first place.

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“For example, amongst homeowners surveyed at the end of April that were either moving home or considering a move, three quarters said this would have been the case even if the stamp duty holiday had not been extended.

“Housing market activity is likely to remain fairly buoyant over the next six months as a result of the stamp duty extension and additional support for the labour market included in the Budget, especially given continued low borrowing costs and with many people still motivated to move as a result of changing housing preferences in the wake of the pandemic.

“With the stock of homes on the market relatively constrained, there is scope for annual house price growth to accelerate further in the coming months, especially given the low base for comparison in early summer last year.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “The bounce-back highlighted by the Nationwide figures, which we have also seen on the ground, should be sufficient to ensure there is no price correction when the stamp duty holiday starts to taper off at the end of June.

“Continuing shortage of stock, as well as the new government-backed 95% mortgage and furlough support, are providing further assistance for the market.

“Broader rollout of the vaccine and easing of lockdown restrictions is increasing confidence in the economy.

“This economic recovery is giving an additional boost to housing market activity rather than the housing market supporting the economy, which was the case when the pandemic first struck.”

Tomer Aboody, director of MT Finance, said: “With continuous government support and stimulus, particularly the extension of stamp duty relief, house prices shot up in April.

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“Added to this the growing availability of 95% mortgages, and money being cheaper to borrow than ever, it is hard to see what is going to stop the housing market in its tracks this year.

“What the end of the stimulus will bring, we are not certain yet, but with economic uncertainty on the horizon, this artificial bubble could slowly deflate. That is the best-case scenario.

“The biggest factor is the lack of properties to buy, which is creating and overwhelming the pursuit of houses with gardens, which in turn is pushing up pricing.

“Will the government look to modify the stamp duty for downsizers in order to release more properties onto the market?

“This, along with the changing social environment with more flats being built in the centre and city of London, means a big cultural shift in society is on the horizon.”

By Jake Carter

Source: Mortgage Introducer

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Buyers and Sellers Take Advantage of the Stamp Duty Holiday

New data suggests that buyers and sellers within the nation’s capital have been seeking to take advantage of the stamp duty holiday, with the numbers of new instructions and transactions rising by 72% and 40%.

According to the data from LonRes, new instructions in March were 72% higher than the year before, with new listing having increased by 24% over the five-year average. Over the whole of Q1 new instructions were up 18% on Q1 2020, although 1% down on the five-year average (2015 to 2019). Transaction volumes (exchanges) in Q1 21 were up 40% on Q1 2020 and 22% higher than the average Q1 figure between 2015 and 2019. All price brackets recorded an annual increase in sales. But the market under £1 million was busiest over the last three months, with a 52% increase in the number of properties sold compared with the same period a year earlier. The number of properties going under offer in Q1 2021 was up 26% on Q1 2020 – the highest Q1 figure since 2014. Q1 2021 also outperformed the long-run average (Q1 2015-19) by 27%. Achieved prices over the last three months (Q1 21) fell by 2.8% in Prime Central London (PCL), 1.9% in Prime London and 2.2% in Prime Fringe, with houses continuing to outperform flats (chart 5).

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LonRes head of search Marcus Dixon said: “The run-up to the end of the stamp duty holiday on 31 March was always going to be a busy time for the housing market and prime London was no different. Encouraging news on the vaccine roll out, together with a detailed road map out of lockdown resulted in a renewed confidence for London’s prime housing market and a surge in activity over the first quarter of the year.”

The first two months of 2021 saw relatively subdued levels of new instructions, with volumes listed for sale falling short of both the previous year and longer run five-year average (2015 to 2019). Of course, at this point vendors thought the stamp duty holiday would be ending on 31 March and the possibility of their buyers, let alone them, being able to complete their purchase before the 31 March deadline was slim.

But an extension, announced by the Chancellor in the Spring Budget saw a further three-month extension (alongside a tapering until September). This boosted market confidence at a time when the government’s vaccine programme was well under way and a roadmap out of lockdown was published.

As a result, March saw new instructions rise, with 24% more properties listed than the March five-year average (2015 and 2019) and 72% more than in March 2020 (albeit that some of March 2020 was spent in lockdown).

Looking at volumes quarterly the surge in new instructions in March cancelled out the falls in the first two months of the year. Overall, in Q1 2021 there were just 1% fewer new instructions than the long-term (2015-2019) Q1 average.

Dixon added: “With the stamp duty holiday deadline initially set for the end of March, new instructions were subdued. But the announcement of an extension in the Spring Budget brought with it a rise in the number of new properties coming to the market and boosted the month overall. It was the market below £1 million that saw the most significant annual increase in sales – unsurprising given this is where the biggest saving, as a proportion of total buying costs, was to be made. But the top end of the market did well too. Despite travel restrictions still being in place, limiting overseas buyer demand and the stamp duty holiday being of less financial importance we saw transactions rise in this market as well. Transactions at the top end of the market were higher than both the 2020 and long run average in Q1.”

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Transaction volumes across prime areas of London rose significantly in Q1 2021. Sales were up 40% on Q1 2020 and 22% higher than the five-year average (2015 and 2019). Indeed, the number of sales in Q1 2021 was the highest since 2016 (when investors were rushing to purchase before the introduction of new additional property stamp duty rates).

A stamp duty deadline has impacted activity this quarter too, as buyers again raced to meet the old deadline of 31 March. The busiest market in the first quarter was the market below £1 million which saw a 52% annual increase in sales.

Yet this rush of activity appears to be about more than just stamp duty savings. The upper end of the market (where the saving accounts for only a small proportion of the overall price) was busy too, with 22% more sales at £5 million or more in the first quarter this year versus last and 41% more than the previous five-year average.

That said, it was our Prime London and Prime Fringe areas which saw the most significant annual increases in sales, with a 43% annual change in Prime London and 54% in Prime Fringe compared with a still impressive 17% annual increase in PCL.

Looking ahead this increased momentum looks set to continue. Comparing the number of homes put under offer in Q1 2021 shows a 26% annual increase (27% higher than the 2015 to 2019 average), with the number of properties put under offer the highest first quarter figure since Q1 2014.

In the first three months of 2021 achieved prices across prime areas of London fell. With PCL recording a 2.8% annual decrease followed by more modest falls of 1.9% in Prime London and 2.2% in Prime Fringe. Increased activity in Prime London and Prime Fringe meant that overall price falls were more significant (as fewer higher value PCL sales were included in the numbers this quarter).

Houses continue to outperform flats outside PCL, with achieved prices in Q1 21 higher for houses in both Prime London and Prime Fringe. This compares with falls for flats across all markets.

BY PETE CARVILL

Source: Property Wire

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Long-term stimulus needed to bring the housing market to life

Long-term stimulus is needed to bring the housing market fully to life, and avoid short-term peaks and troughs, according to Robert Burdett, managing director of James Leigh property Management.

Burdett believes that the stamp duty holiday is an unprecedented and very welcome shot in the arm for the housing market when it was desperately needed.

However, he said: “But with lockdown now easing and COVID-19 firmly in retreat, now is the perfect opportunity to be looking at how the housing market can be built on firmer foundations than it has previously enjoyed.

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“The introduction of the 95% mortgage is a welcome move for first-time buyers, but more needs to be done to ensure the whole market can enjoy a stable future.”

Lending criteria currently prevent some buyers from accessing mortgage finance because on paper their income is not high enough to meet the lender’s criteria for income, even though they may be paying more in rent than they would be for a mortgage.

Data released by Estate Agency firm Keller Williams show the changing pattern of where people want to live, and the outdoors features strongly in the research.

Burdett said: “The research published by Keller Williams shows that the COVID-19 pandemic has changed the way people are thinking about the homes they want to buy.

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“Working from home in particular means that people are not as reliant on access to the cities, and so can buy where they want to live rather than where they need to access work.”

Support for the housing market for the long term could include a continuation of the Help to Buy scheme and reform to the mortgage industry so that affordability reflects current household expenditure.

Burdett added: “In the end, the housing market needs measures in place that will flatten the bumps in the road and create a sustainable future market.

“If the stamp duty holiday has taught us anything, it’s that short terms measures whilst useful at the time, do nothing for longer-term stability and growth.”

By Jake Carter

Source: Mortgage Introducer

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Stamp duty extension sees the property sales spike in March

The extension of the stamp duty holiday saw the property sales market spike in March with the renewed momentum looking likely to be sustained over the near term, the latest RICS Residential Market Survey has found.

The survey posted the strongest results in some months and those surveyed anticipated a busy three months ahead for the market.

Indeed, the month saw agreed sales hit the strongest level since August 2020 whilst new buyer enquiries were at a high last seen in September 2020.

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The report read: “The March 2021 RICS UK Residential Survey results show sales market activity picking up sharply over the month, with indicators on enquiries, sales and new instructions all improving noticeably compared to last time out.

“Survey participants highlight the extension of the stamp duty holiday as a significant driving force behind this renewed momentum, while a gradual loosening in lockdown restrictions is also said to be contributing to the rise in activity.”

Nigel Purves, CEO of Wayhome, added: “Demand clearly continued to outstrip supply in March, with a net balance of +59% of respondents citing a rise in house prices across the country.

“New buyer enquiries rose +42% – the strongest return since September 2020 and sales also spiked last month. This helped create a constant drumbeat of activity as we edged closer to the start of the traditionally busier springtime period.

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“While we are seeing a new-found confidence among many buyers and sellers, sadly this just isn’t the case for a large proportion of aspiring homeowners across the UK.

“Even with the stamp duty extension for an extra three months spurring on hopeful home buyers, there are many who find themselves overlooked and ignored due to their household income not meeting a mortgage lender’s criteria.

“This is despite them already having a deposit saved and being able to afford the equivalent of mortgage repayments in rent each month. More needs to be done to level the playing field and provide people with alternative routes into homeownership.”

By Ryan Fowler

Source: Mortgage Introducer

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