The stamp duty holiday announced in July for properties up to£500,000 in England provided a welcome boost to the housing market allowing it to make a recovery from the effects of the coronavirus pandemic. The cost saving incentive has certainly had an impact and resulted in increased activity in the purchase market, including buy-to-let properties.
However, the surge in mortgage applications is not without its problems, with some lenders being overwhelmed with new business and delays occurring with conveyancing work as solicitors try to deal with the increased demand on their services.
The deadline of 31st March 2021 when the stamp duty holiday is due to end means that time is running out for anyone looking to take advantage of it. Recent research by Legal and General Mortgage Club found that the average time for a property purchase, from finding a property to completion is taking at least 14 weeks as processing times have doubled due to the high demand.
At Buy-to-let Direct, we only deal with buy-to-let mortgage applications, but we have heard warnings from the home moving industry that some purchase transactions are taking up to 5 months to complete, which means that the window of opportunity of getting a mortgage for property purchases that avoid paying stamp duty may well be closed.
There has been concern throughout the industry that having a hard deadline for property purchases to complete may cause some transactions to fail at the last hurdle, especially as the current Help to Buy scheme is also due to end on 31st March.
For example, prospective first-time buyers may not have enough savings to cover the 3 per cent stamp duty charge if it was suddenly payable when they are due to exchange contracts on their new home. This could then cause a breakdown in the property chain, causing unintended but drastic knock-on effects in the housing market.
There have been calls by the home moving industry for the stamp duty holiday to be extended by another 6 months and to have a tapered ending to avoid creating a cliff edge scenario for buyers. This would then release the pressure on all parties involved in property purchase transactions and encourage the housing market to continue its recovery beyond the 31stMarch deadline.
Whatever happens with the stamp duty deadline, it is important for mortgage lenders and brokers to be supportive of each other during this period of increased demand for finance. It may seem sensible to submit cases to lenders as quickly as possible, but it is just as important to make sure that they are fully packaged, with all the required documentation, in order to ensure the application can be processed without unnecessary delays. Equally it is vital that lenders are transparent about their current turnaround times so that brokers and their clients have realistic expectations for offer and completion dates.
After all, we’re all in this together.