The Stamp Duty deadline is etching closer and housebuilders, both New Build and Shared Ownership, are urging hopeful buyers to complete before the 31st of March, 2021.
Currently, home buyers in England are able to purchase properties without paying Stamp Duty to the value of £500,000 and those purchasing homes above this can also make savings on Stamp Duty by benefiting from temporarily reduced rates.
With Stamp Duty savings and low interest rates set by the Bank of England, now could be an ideal time to buy for many. But how can housebuilders and property developers help their buyers through the process quicker so that they make the deadline?
In a hurry? Ask our experts for their advice about how to help your buyers complete before the Stamp Duty holiday ends.
Demand for housing and mortgages is strong but will it dip?
UK Finance data shows that mortgage lending for residential properties, including New Builds, recovered strongly in the third quarter of 2020, coming close to levels seen in Q3 in 2019.
This is promising considering that the nationwide lockdown between March and July in 2020 delayed numerous mortgage applications and transactions from completing. Construction sites were delayed too though many opened in accordance with Government guidelines and have strived to “Build back better” (as Boris Johnson would say).
The Primeminister has promised plans to bring back 95% mortgages and “End generation rent” in the midst of the pandemic and housebuilders eagerly anticipate news of any schemes that could encourage demand in the housing sector.
The trade association’s Household Finance Review says that while activity is likely to be strong through the first three months of 2021, demand is likely to come under pressure once Stamp Duty relief ends.
Housebuilder Berkeley Group call on Stamp Duty scrap
Speaking on the matter of Stamp Duty Rob Perrins said, “I really hope he extends the Stamp Duty holiday for homes worth up to £500,000, and halves the rate for those above that. Stamp Duty causes a huge drag on the economy and causes people to live in the wrong home.”
He also said that the inability for buyers to move up the housing ladder exacerbated the existing issues for those failing to get on in the first place and that the Bank of England needed to relax lending laws.
Has the Government responded to the Stamp Duty extension petition?
Others within the housing industry were a little less hopeful, asking for just a six month extension on the Stamp Duty holiday; unfortunately, the response to a petition which had over 22,000 signatures, is that the end date is firm and unchanged.
This could be bad news for housing developers as the current Stamp Duty cut has provided many buyers the opportunity to purchase properties of higher value.
If the holiday ends and buyers miss the deadline, some fear transactions won’t complete and buyers will have to reconsider smaller or lower value properties.
There are also concerns that after the holiday ends, a “Cliff edge” effect could be leering for the housing industry.
Here’s how the Government responded to the petition for the Stamp Duty extension:
“As the relief was to provide an immediate stimulus to the property market, the Government does not plan to extend this relief. SDLT is an important source of government revenue, raising several billion pounds each year to help pay for the essential services the Government provides.
The Government is committed to supporting home ownership and helping people get on and move up the housing ladder. When the SDLT Holiday ends, the Government will maintain a SDLT relief for first time buyers which increases the starting threshold of residential SDLT to £300,000 for first-time buyers that purchase a property below £500,000.
In addition, a new Help to Buy scheme will be introduced from 1 April 2021. This scheme will run until March 2023. All tax policy is kept under review and the Government considers the views it receives carefully as part of that process.”
How can housebuilders help their buyers complete and meet the deadline?
By encouraging buyers to:
Have a deposit ready
Lots of lenders are asking for 15% deposits, though the size of a deposit will vary depending on the buyer’s circumstances including how much they earn, the regularity of their income, their credit score, age and even the type of property they’re buying.
Saving a deposit between now and the Stamp Duty deadline may be a task for some buyers, which is why some turn to parents for gifted deposits which can boost deposit sizes and sometimes help buyers get better deals on their mortgages.
Find paperwork and legal documents
This could include bank statements, saving account statements, payslips or a SA302 if the buyer is self-employed.
Legal documents such as a passport, driver’s license or birth certificate will also be needed to prove identification.
Find an appropriate lender with a mortgage broker
Finding the right lender for a New Build mortgage could be the difference between approval and rejection for some buyers and from speaking to our own customers who have previously applied for a mortgage either on their own or with another broker, we know all too well that inaccurate and misinformed advice can cause painstaking delays.
Recommend a Mortgage Hut broker
Banks and lenders each offer different terms and conditions for their mortgage products and this can take time to compare, especially if the individual looking is someone who is new to the mortgage process and unsure of where to look for the best deals.
We work closely with housebuilders, providing practical information and advice on how their customers could best approach their mortgage application, in order to secure finance for their purchase.
Call us on 023 8098 0304 or alternatively, make an enquiry, stating that you’re a housebuilder or property developer. We’ll appoint the relevant expert to get back to you with the information you need and assistance you require.