The stamp duty holiday continues to motivate buyers to complete before the end of March in order to save up to £15,000. In many instances, buyers have brought forward moving plans by three or four years so that they can take advantage of the tax break. And yet, as Halifax revealed in its latest house price index, the average house price has risen by more than £15,000 since June, suggesting that any saving on stamp duty will be outweighed by the higher purchase price. Buyers therefore need to ensure that they are not paying over the odds in order to ‘save’ money on stamp duty, particularly as some market forecasts predict that transactions and property prices will fall once it comes to an end.
There is likely to be further bad news in the spring with unemployment set to rise once the government’s furlough scheme finishes. There is also the Brexit transaction period to come – no-one can predict what that will bring – and the spring Budget, which is likely to pave the way for tax hikes. It is widely rumoured that there will be significant changes to capital gains tax, hitting landlords hard as the Chancellor looks for ways to pay for the costs incurred by the pandemic. With the economy set to take a while to recover from 2020, a slowdown in housing market activity is more than likely over the next 12 months.
However, there is good news. Interest rates look set to remain low and there has not been much movement in mortgage rates recently, with lenders keeping pricing competitive. Saffron building society is to allow ‘some flexibility’ when considering applications from self-employed borrowers, offering manually-reviewed applications on a case-by-case basis and a more common-sense approach to lending. In addition, contractors will only need to have contracted for three months, with no minimum income requirement as the application will be based on affordability.
There is also welcome news for first-time buyers with more choice at higher loan-to-values. Halifax is the latest lender to return to 90 per cent loans, although with restrictions such as only lending to first-time buyers, not on new builds, and with a maximum loan size of £500,000. Nationwide has also started offering 90 per cent LTV to movers as well as first-time buyers, and has lifted its ban on gifted deposits. When you consider that as recently as last month lenders were having to pull 90 per cent products with little or no notice because they could not keep up with demand, these developments are encouraging. They also suggest that lenders do not expect a plunge in prices, leaving those borrowers in negative equity where their property is worth less than their mortgage.
With continued uncertainty ahead, good advice is essential, which is where a whole-of-market broker such as AWS Financial Services can help. We source the whole market to find the right funding solution for your requirements. We have lots of experience of working with more complex cases, so if you are a day-rate contractor, self-employed or a professional such as a doctor, get in touch to find out how we can help you.