As part of the economic stimuli the Chancellor, Rishi Sunak, introduced a Stamp Duty Holiday for the remainder of the financial year. What this means is that a property purchase up to £500,000 will attract zero stamp duty, above that you just pay the applicable rate on the surplus over £500,000.
This has now been around for two months and it certainly looks like it has stimulated the housing market. Anecdotal evidence that I have hear is that properties that have been up for sale for quite a while at below £500,000 have suddenly got buyers queueing up.
Russell Galley, the managing director of Halifax, the UK’s largest lender, said: “Following four months of decline, average house prices in July experienced their greatest month-on-month increase this year, up 1.6 per cent from June and comfortably offsetting losses in 2020.”
Certainly there has been an uptick in enquiries for mortgages and first time buyers eager to get on the housing ladder are at the forefront of that rush. Not having to save up the extra on top of a deposit for the stamp duty perhaps accelerating plans to get on the housing ladder.
However there are problems in the mortgage market that are hindering many, mainly first time buyers. Pre Covid there was a huge choice of smaller deposit mortgages available in the market place. Now they are like hen’s teeth. At the time of writing only one lender has a 90% mortgage offering (that is not location specific) and that is for first time buyers only. HSBC were previously leading the way but have since pulled out of the market, their service levels having been pushed beyond their limits. I spoke with a mortgage broker friend yesterday who told me HSBC were a month behind in processing new business.
Service at most lenders has been hit since the housing market was reopened. Of course many staff have returned to the office, but I would estimate most have not. NatWest have closed their telephone lines so any cases I have with them are almost impossible to get updates on.
I’m telling clients that “normally” I would expect a mortgage offer within two weeks but now we are looking at four to six weeks. Right now with about six months left of the stamp duty holiday there is less concern but if there are still these delays come the new year then there are going to be purchasers at risk of missing out on the stamp duty holiday.
All in all the stamp duty holiday has helped the housing market in the short term, the mortgage market is busy but service has suffered.
