During the past couple of months, the UK property market has been on the rise largely fuelled by the government’s stamp duty holiday. However, doubts remain over the state of the housing market once the stamp duty cut ends in June – leaving many buyers and sellers uncertain about their financial standing.
Here at Kara Accountants, we have evaluated ways in which the pandemic has impacted the housing market and what buyers can expect to see in the next few months.
Extension To Help to Buy Scheme
In February 2021, the government announced that they would be extending the deadline for completion of the build and purchase until 31st May to give buyers and builders more time to take advantage of the outgoing scheme.
As a result of the pandemic, many construction workers have needed to self-isolate, supply lines have slowed, overseas labour may have needed to quarantine, and some traders have been furloughed causing delays in new build completion. This extension will provide members of the Help to Buy scheme an extra two months to complete developments, however many people are concerned that this will not be enough time to make up for the delays.
The scheme, in its current form, is coming to an end in England. However, as of the end of January, there were 16,691 sales still to be completed under the current scheme.
Stamp Duty Holiday
Potentially the biggest impact on the housing market has been the stamp duty holiday imposed by the government last July. Mid-range buyers in more expensive parts of England are likely to be the biggest beneficiaries of the stamp duty cut, with savings of £10,000 on a £400,000 property and £15,000 on a £500,000 property.
This cut has provided a boost to the housing market, with prices up 7.5% compared to last year. However, buying a home based on the stamp duty cut could be a dangerous move, as you may end up paying a premium now and then see the property’s value fall over the next 12 months.
Impact Of Furlough & Lockdown
Finally, furlough has also had a large impact on the housing market, impacting individuals’ ability to apply for a mortgage. When the property market reopened last May, banks generally allowed mortgage applications from people on furlough. However, that has since changed, with some of the biggest lenders now refusing to consider furloughed income at all.
Furthermore, lockdown itself has impacted the housing market. Mortgage lender, Halifax, said the market would slow over the coming months because of new coronavirus lockdown rules and a weaker economic backdrop.
These are just a few of the things that buyers and sellers should keep in mind when entering the property market during the pandemic. With legislation frequently adapting to this uncertain environment, all those making a major transaction should be wary.
Have you purchased property during the pandemic? Tell us about your experience!