Anderson HarrisMarket Insight
What lies ahead for the property market?
Published: 23rd February 2021
This Article was Written by: Adrian Anderson
The current stamp duty holiday was due to close on 31 March 2021, however, it’s looking very likely the Chancellor will extend it in his forthcoming Budget. We discuss what lies ahead for the property market … and why the future is looking rosy.
Back in July last year, the Chancellor announced a temporary stamp duty holiday that cut the tax rate to 0% for all properties £500,000 or under. There was also a cut for those buying additional properties (for example, if they were investing in property for letting or a second home). The stamp duty rate there started at 3% for properties up to £500,000.
The ‘holiday’ was to last until 31 March this year and was intended as a support measure to keep the property market moving during the pandemic.
There’s no doubt the measure has indeed proved a big success. Many property professionals have reported that they have never been busier. This is backed up by recent statistics which indicate the stamp duty holiday helped boost house sales by close to 140% (their highest level since 2007).
The Centre for Policy Studies (CPS) recently said the number of transactions rose from 132,090 between April and June, to 316,300 in the final quarter of 2020.
Fortunately, it is now looking likely the Chancellor will announce an extension the holiday in his Budget on 3 March (as many are pressing him to). This would take the pressure off those who wanted to take advantage of the stamp duty reduction before the end of the month. It is envisaged they will no longer have to complete their purchase by the 31 March 2021.
At this stage, that’s very welcome news. If people did not have a property under offer and had not started the process, it was pretty much too late for the legal searches to be done in time. Also, given the high demand, some mortgage lenders had been taking longer than usual to complete their part of the process.
What lies ahead
So, the move brings much optimism for the property market. Here at Anderson Harris, our team are certainly seeing a big pent up demand from buyers seeking to move. In particular, and following the UK’s third national lockdown, there’s a growing appetite for properties with more space.
It would seem the desire to move is still prevalent, especially from buyers whose incomes have not been adversely affected by Covid, or who are confident about their future income when taking on a larger mortgage commitment.
A good time to move
Let’s also not forget that mortgage rates are still incredibly cheap. In fact, for those with a large deposit, it has almost never been cheaper to borrow. This encouragement is evident in the many families who are accelerating their move to properties with greater space and in more rural locations.
And it’s interesting that Economists are predicting a spending bonanza when the lockdown lifts, given many people have built up considerable savings over the past year. There’s no doubt that this bonanza is likely to extend to the property market too.
So the Anderson Harris team welcome the news the Chancellor is looking to extend the stamp duty holiday beyond 31 March.
Confidence and sentiment always play a large part in people’s decision processes to move on. With the impressive role out of vaccines, and the announcement that all adults should have been vaccinated by the end of July, we feel certain the property market will remain very busy.
It’s also good to see those banks who tightened their lending criteria at the beginning of the pandemic, are now starting to loosen them – see this recent article in The Telegraph.
When we reflect on this time last year and the beginning of the pandemic, the current outlook for the economy and bonuses is certainly more positive.
So, in our opinion, good times lie ahead for property buyers and sellers. The cheap lending rates and more sensible lending criteria in place will still encourage people to move properties. They will be the fuel needed to help the property market remain resilient and flourish in the months ahead.
Can we help?
If you have property plans for this Spring and Summer and want independent and tailored mortgage advice on the best deals for you, please contact one of our team of specialists on tel. 020 7495 6633 or via our contact form.