It’s been a long and, at times, difficult year for the property market and while it’s important to make the most of the break that the festive period provides, it’s also useful to look forward.
After all, there are some clear challenges on the horizon that brokers – and indeed many others involved in the property market – will have to face in the coming 12 months.
The end of Help to Buy
A big early deadline to be aware of in 2023 is the conclusion of the Help to Buy scheme.
While applications had to be in by the end of October, buyers have until the end of March in order to legally complete the transaction.
As brokers know, Help to Buy cases have more parties involved with the transaction, on account of the involvement of an equity loan. Of course, with more parties involved, it’s very easy for delays to occur, putting the chances of hitting that deadline under greater pressure.
This makes it all the more crucial to work with firms who have experience in Help to Buy and the particular challenges which can occur with these deals, ensuring that delays are kept to a minimum.
Is this the year for shared ownership?
With Help to Buy out of the picture, first-time buyers will likely be looking for other avenues where they can get some support in getting onto the housing ladder.
It may mean that they look afresh at the likes of shared ownership, since it could offer a route to home ownership without the need to save a more significant deposit.
Once again, this sort of specialist transaction requires expertise throughout, from the broker advising on the case to the conveyancers handling it. Working with the right partners is therefore crucial to delivering a satisfactory outcome to clients.
The role of remortgages
Remortgages are again set to play an important role for all of us in the property market. In fact, according to forecasts from UK Finance, remortgaging is set to reach around £89 billion next year, compared with £82 billion this year, and £65 billion in 2021.
Of course, borrowers will face a rather different marketplace from when they took out their initial deal. While the interest rates on mortgage products have dropped from some of the highs seen at the height of the uncertainty following the mini-Budget, they remain higher than has been the norm in some time.
Brokers will therefore have an even more vital task ahead of them, helping those borrowers calculate not only what they can afford but what form of mortgage deal is best for their long-term prospects.
The inflation equation
A huge question that hangs over all of us heading into 2023 is around inflation. The rate at which we have seen the cost of living increase this year has been little short of staggering – at the time of writing, the consumer price index measurement of inflation stands at 11.1%, the highest level in more than four decades.
While the expectation is that inflation will start to drop next year, as the last few years have demonstrated, events can quickly cause things to take a different course. That rate of inflation will continue to have a big bearing on brokers and their clients, with the rising cost of living putting affordability calculations under ever greater pressure.
What’s more, the looming threat of inflation is also likely to result in further increases to the bank base rate. Since December 2021 we have seen base rate move from just 0.1% to 3%, and it seems almost inevitable that there will be further increases to come. Indeed, the markets are currently suggesting that base rate may hit as high as 4.5% in the first half of next year, with the inevitable knock-on effect that would have on the mortgage market.
Doing your duty
There’s also the Consumer Duty to think about. For most brokers, the core of what the Duty is about – focusing on caring for the customer – is already at the heart of how they operate.
However, there’s no question that advisers will have to think carefully about what the Duty means for their business, and how they can go about demonstrating that they are compliant with the new rules.
It’s good to talk
Finally, it’s worth noting how important communication is going to be for all brokers. The tumult of the last month or so has reinforced how crucial clear communication is from everyone involved in a case. It’s easy for those not involved in the property market to panic, as brokers will know only too well given the events following the mini-Budget.
As a result, keeping close to your clients and providing a calm presence is undoubtedly a smart tactic for the year ahead.
Karen Rodrigues is director of sales at eConveyancer