Broadly speaking, you would have to say that the Budget did just about all it could to ensure the UK economy has the best chance of recovering post-pandemic, and specifically for the housing market, that it does not suffer a severe cliff-edge.
Much has already been made about the decision to extend stamp duty, and the introduction of the government’s guarantee to bring more 95% LTV mortgages to market, and both I would think will be welcomed by housing market stakeholders.
The stamp duty decision was absolutely necessary given the large numbers of existing transactions which are currently looking unlikely to complete before the end of March. Plus, the slight tapering after the end of June, providing a nil rate band for properties under £250k, is undoubtedly a measure aimed at first-timers who are much more likely to purchase properties below that level.
Questions however do still remain – as has been pointed out, if your clients complete on a purchase prior to the end of June, they could save a maximum of £15k in stamp duty costs. If they complete between July and September, that maximum drops to £2.5k.
£12.5k is a big difference in savings and you can guarantee that purchasers will be putting the pressure on all housing market stakeholders to complete their purchase before that first deadline because of it. Part of the reason why so many industry professionals were calling for an extension was due to the stress and the sheer amount of work they were dealing with.
Conveyancers in particular appear to be hit hardest by this – I’m not so sure this decision eases their burden much, especially if as expected, new purchasers are tempted into the market now, hoping they too can complete before the end of June. Plus, of course, the introduction of 95% LTV mortgages might open up a new front for potential buyers who have not been able to access the market without bigger deposits.
It leads me to think there could be a big spike in demand in the coming months, and the flip side of that particular coin, is whether we have enough in the way of supply to deal with it.
What has perhaps been overlooked somewhat in this regard, is the forthcoming ‘end’ of lockdown. I write ‘end’ because the data is clearly going to drive the pace at which the loosening of restrictions is made, but certainly from our perspective, there is an anticipation that – much like with Lockdown 1 last year – a significant number of potential sellers will come to market in the months ahead.
During this lockdown, and previous ones it has to be said, there has been a sizeable number of people who have put their property sale plans on hold, simply because they don’t want strangers walking around their homes during a pandemic. The thought of property viewings, followed by surveyor visits and the like – regardless of how safe they have been made for vendors – has been off-putting, and we anticipate that as the threat lessens, so will the fear, and many more people will be confident about initiating those sales.
In that scenario, supply should increase, but whether it increases enough to meet the anticipated and corresponding increase in demand is a question which as yet remains unanswered.
Overall, however, with the immediate threat of a housing market cliff-edge having effectively been removed, there is much to be positive about. Plus, there’s also much to be said for the package of employment measures that the Chancellor has either introduced or extended in the Budget; the upshot of which appears to be a dip in the forecast for unemployment numbers (when furlough is finally ended).
That will clearly aid consumer confidence, income levels and the ability to perhaps make choices around moving home, etc, which would probably have been off the table if significant numbers were to lose their jobs.
Prior to the Budget, there was something of a ‘perfect (and worrying) storm’ potentially brewing, but one might consider that post-Budget that potential bad weather is dissipating. Certainly, with lenders showing ongoing strong levels of lending appetite, and with demand/supply hopefully not being too far out of kilter, the outlook for the rest of the year now looks pretty bright.
Simon Jackson is managing director at SDL Surveying