There’s now just a little over four months to go before the Chancellor is due to slam the door shut on the Stamp Duty holiday that has saved homebuyers up to £15,000 in land tax since June this year.
Recent figures from the National Association of Estate Agents (NAEA) puts borrower demand for mortgages and housing during 2020 at its highest level since June 2004 – a spike in mortgage business driven in large part by the suspension of Stamp Duty Land Tax (SDLT) until March 31 next year.
Ordinarily it would be entirely possible to complete a house sale and purchase within four months would be – but we aren’t living in normal times and very little about the housing market in 2020 has so far been ordinary.
So, if you’ve got your heart set on a move before SDLT is reintroduced for purchases above a sale price of £125,000 then it’s really important that you get moving now to give yourself the best chance of getting in under the wire. Here’s why:
Mortgages are taking longer to approve
With mortgage lenders operating largely remotely and often at reduced staffing levels, there’s already pressure on their processes and systems to review and reach decisions on applications from borrowers.
Added to this is the increased risk associated with lending during a falling economy, meaning mortgage lenders are applying more scrutiny to all applications, and while they’re still trying to process applications quickly, there is a much greater risk of delays – especially at times of lockdown – which inevitably make the whole transaction longer.
Legal and General report that the time between application submission and a mortgage decision has doubled from around two weeks to up to a month.
Some mortgages are harder to get
The same NAEA report suggests that 90% mortgages, which are among the most popular – especially among first-time or younger buyers – are becoming more expensive, reflecting the inherent risk involved, and are therefore harder to get.
According to their figures, the NAEA estimates there are now fewer than 60 mortgage products on the market that will lend 90% of the purchase price of a residential property – down from a whopping 779 in March.
Lead times on surveys are longer
If you’re planning on having survey done on your house – and some lenders will insist that you do – then you need to factor in the backlog that surveying firms are currently dealing with.
Prior to lockdown in March it wasn’t unusual to have your survey completed within a week. By the time the housing market was reopened in the summer and the incentives offered by the Government triggered huge demand, that lead time had jumped to as much as three weeks.
Searches are slower
According to some reports, demand for Land Registry searches have exploded by as much as 1000% leaving some local authorities simply unable to cope with the demand. In turn, that translates into a potentially long wait before your conveyancer can complete that element of the purchase.
All of this means the timescale to complete a move has lengthened. Until this year, it was possible – though generally uncommon – to complete a property sale and purchase within a month if every person and agency involved in the process was on board.
Certainly, you’d expect to be able to complete within 8 weeks using the fairly rudimentary formula of two weeks for the mortgage application, six weeks to exchange contracts and two weeks to complete.
Now, with all the challenges the market faces, getting the job done in three months would probably be seen as fairly efficient business – which makes the four month deadline for SDLT closer than is probably entirely comfortable.
If you’re looking to move and you want to give yourself the best possible chance of saving on Stamp Duty, why not get in touch with us and see how we can help to ensure your mortgage application stands the best chance of being approved?
And if you really do want to move before next April, then getting the whole process moving before Christmas is probably likely to be a key to success.
Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority
Your property may be repossessed if you do not keep up repayments on your mortgage.
Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.