Author: Antony Antoniou

A new report funded by high profile consumer champion Martin Lewis says the government must do more to help ‘mortgage prisoners’.

These are existing home owners who are unable to remortgage to a cheaper deal with another lender because they don’t meet strict borrowing criteria brought in after the 2008 financial crash – even though they’re generally keeping up with repayments and would often be paying less if they switched.

Lewis’s consumer organisation MoneySavingExpert has championed this cause for five years.

The new report – published by the London School of Economics and funded by Lewis himself – claims that mortgage prisoners have higher rates of physical and mental health problems than the average borrower, and are up to 40 per cent more likely to default as a result of Coronavirus.

Lewis says that while the Financial Conduct Authority has adopted policies to help mortgage prisoners, it has now reached the limit of its powers in this area. This means only the government can, and should, free mortgage prisoners.

“Mortgage prisoners are the forgotten victims of the 2008 financial crash. The government at the time chose to bail out the banks, but unfairly – immorally – hundreds of thousands of their victims were left without adequate help, trapped in their mortgages and the financial misery caused by it. And they have been forgotten ever since” says Lewis.

“The Prime Minister has touted the idea of subsidising five per cent deposit mortgages for first-time buyers. Alongside that, there is a moral responsibility to release money to free mortgage prisoners from their penury …

“Speed is necessary now, as coronavirus has torn through people’s livelihoods. But for people whose finances and freedom have already been destroyed for more than a decade, they had already met breaking point – they are now defeated. Nobody should underestimate the detriment to people’s lives and wellbeing if the Treasury doesn’t act, and act soon. Intervention can and will save lives.”

The LSE/Lewis report recommends, amongst other things:

– Mortgage rescue where homeowners whose mortgages are financially unsustainable are able to stay living in their homes as tenants. The property would be sold to housing associations with a buy-back option later;

– Bringing all “closed book” mortgages under the oversight of the FCA. Currently, owners of “closed book” mortgages – those borrowing from a firm that no longer lends to new customers – are outside the regulator’s reach.

The trend of buyers apparently fleeing the city to get more for their money in the country has hit the buffers – at least if vendors want to go to a National Park.

Far from saving money they’re likely to pay a hefty premium of over £155,000 according to Lloyds Bank.

Its research also shows that homes in national parks are, on average, 58 per cent – or £155,948 – more expensive than properties in their surrounding areas.

The New Forest in Hampshire is the UK’s most expensive national park, with average house prices of £696,568, That’s 107 per cent – or £360,134 – more expensive than properties in the surrounding area.

The South Downs, 10 years old and England’s newest national park – has homes costing £644,483 or 83 per cent more than properties nearby. And in the Lake District a property will typically cost £412,213, over 120 per cent – £226,848 – more than nearby homes.

House prices in national parks continue to rise, with the average price up seven per cent in the last year, compared to a two per cent rise for the average property in England and Wales.

This comes despite properties in national parks now costing 12.4 times average local earnings – the New Forest is the least affordable national park, with house prices at 16.7 times the average salary in the area.

“Buyers looking for a breath of country air could consider properties in the mountains of Snowdonia, the valleys of Dartmoor or in the rolling hills of the Yorkshire Dales, where prices for homes in stunning vistas are more affordable” according to Simon Brown of Lloyds Bank.

Properties in national parks continue to rise above the national average, with homes experiencing a 32 per cent increase since 2010.

Buyers in around 30 per cent of English cities are almost certainly already too late to complete a purchase by March 31 and the end of the stamp duty holiday.

A property consultancy, The Advisory, says with only 21 weeks to go before the end of the holiday – including the lockdown starting tomorrow and then the typically-extended Christmas break – only 70 per cent of English cities have a strong chance of completing a sale before the deadline.

“Because it takes roughly 21 weeks for house sales in hot markets to find a buyer, accept an offer and complete the legal process, only house sellers that are already on the market – or lucky enough to be in an area where houses are likely to sell fast – will be able to secure a buyer and get their deal over the line before the deadline” warns The Advisory’s founder Gavin Brazg.

“Everyone else will no doubt face last minute chain collapses as buyers pull out of the deal or try to renegotiate their purchase price downwards” he adds.

There has already been widespread concern over whether the current backlogs for surveyors, conveyancers and local council search departments can be cleared to allow deals to be completed in time for buyers to benefit from the stamp duty holiday.

Last week a letter signed by 15 industry heavyweights ranging from leaders of agents to removal firms was sent to Chancellor Rishi Sunak seeking an extension to the holiday, either through a tapered end or by a simple longer period.

Sunak was told that the current surge in demand by purchasers was putting the market infrastructure under huge pressure.

The Advisory’s data is the latest weapon in the argument for an extension. Using its PropCast PropTech tool – which assesses the market in different locations – The Advisory has drawn up a table which you can see below.

The Advisory says the greater the sales success rate in a city, the greater the buyer demand and the faster property should sell – suggesting buyers could still make the stamp duty deadline.

In the table, GREEN indicates where over 50 per cent of properties on the market currently under offer, suggesting high levels of buyer demand and properties selling at an above average speed.

ORANGE indicates where 35 to 49 per cent of properties on the market are currently under offer, suggesting moderate levels of buyer demand and properties selling at an average pace.

And RED indicates where fewer than 35 per cent of properties on the market are currently under offer, suggesting low levels of buyer demand and properties selling at a below average pace.

A London property investment consultancy says 22 per cent of properties it’s advised overseas purchasers on this year have been bought sight-unseen.

London Central Portfolio says it’s experiencing an influx of international buyers as the capital battles Brexit uncertainty and the long-term poor Sterling performance, as well as the pandemic.

It says over 22 per cent of the transactions it advised on this year involving overseas investors ended up with a ‘sight unseen’ purchase. This suggests, it claims, that London is regarded as a global city and a ‘go-to’ destination – even if some buyers don’t go to it themselves to check properties they purchase.

“We have been able to advise based on our intimate knowledge of the prime London market and our unique provision of a detailed financial model enabling our established clients to invest sight unseen” says LCP chief executive Andrew Weir.

He says other incentives for such purchases include the UK stamp duty holiday ending in March 2021, the anticipated two per cent additional stamp duty surcharge for overseas buyers being introduced in April, and – “most importantly” he says – the current discounted prices in the market compared to its peak prior to the Brexit referendum in 2016.

Weir says the current “unique buying environment” has resulted in a strong demand from large scale property investors “some acquiring large blocks of flats preferably with the opportunity to add value to maximise their returns.”

LCP says with the significant increase in purchases made via virtual viewings and evidence of pent up demand, 2021 may well see the beginnings of a rally in prime London similar to that following the Global Financial Crisis, where prices increased 61 per cent between March 2009 and September 2012.

LCP describes itself as a boutique-sized firm acting for UK and overseas property investors and homebuyers, providing “superior access to buying opportunities” to suit all aspirations and budgets.

There’s one key takeaway for agents from the weekend’s announcements on the next England-wide lockdown – the housing market is staying open.

However, there will be some short-notice changes on the fringes of agency activity.

This includes an extension to the owner occupiers’ and landlords’ mortgage holiday; and an extension of the furlough system. Both are being extended until at least the scheduled end of the latest lockdown, which is December 2.

An announcement is expected from the Financial Conduct Authority today concerning the extended mortgage holiday, which began in the spring and should have finished on Saturday October 31 – just 48 hours ago. It is thought likely that the extension will be for another six months.

Under the old system, owner occupiers and landlords who needed help were able to request a payment holiday until October 31 – this is now to be extended, along with the corresponding ban on repossessions.

As before, future mortgage payment holidays and partial payment holidays under this government initiative will not have a negative impact on credit files.

For agents and industry suppliers with staff who were expected to come off furlough on October 31, the Saturday just gone, there may be relief that the scheme is to be temporarily extended until the end of the England lockdown on December 2.

Employees will receive four-fifths of their current salary up to a maximum of £2,500..

In the meantime the housing market will remain open.

Mark Hayward, chief executive of NAEA Propertymark, says: “It is essential all agents continue to play their part in reducing the spread of the virus through following all relevant guidance. Agents must operate in accordance with government and Propertymark guidelines, to keep the market moving through these uncertain times.”

Statements by Housing Secretary Robert Jenrick and the Ministry of Housing, Communities and Local Government over the weekend both gave a ‘stay calm and carry on’ message to agents and the industry, urging people to continue following existing guidance.

Figures just released from HM Revenue & Customs show just how much stamp duty buyers pay, at least before the current holiday exemption.

For transactions in the year to April 2020 – so including a little of the spring lockdown period, but none of the current SDLT holiday – residential stamp duty land tax receipts across England rose by one per cent to £8,420m.

This was a one per cent rise in revenue over the same period a year earlier, despite there being a one per cent fall in transaction numbers – 1,023,000 in the year to April 2020 compared with 1,036,000 the year before.

Homes that sold for less than £250,000, accounted for 10 per cent of residential property receipts and 57 per cent of residential transactions.

First-time buyers purchasing properties under £300,000 do not have to pay stamp duty but will pay five per cent on any portion between £300,001 and £500,000.

This first time buyer exemption – introduced back in 2016 – saved FTBs an estimated £541m in the year to April 2020.

Some 222,700 transactions had first time buyers’ relief in the period under review, an increase on the year before at 218,900.

Jackson-Stops chairman Nick Leeming says this is a historic picture now the Coronavirus has led to a market closure for some weeks and has prompted a much wider exemption for the duration of the SDLT holiday, which ends next March.

“There’s no denying the stamp duty holiday has had its desired effect on the market. On the ground, we’ve seen a notable uptick in activity across every branch, with sales agreed last month amongst the highest on record across the Jackson-Stops network.

“The knock-on effect an active property market has on the wider economy is hugely significant, particularly at a time when businesses need people to spend.

“Yet, with latest data from Zoopla showing that 140,000 more buyers are presently waiting to complete their property transactions compared to this time last year, this stampede of activity is now resulting in delays from mortgage advisors, with lenders and conveyancers coming under immense pressure.

“With a no-deal Brexit on the cards and both the stamp duty holiday and the current Help to Buy scheme soon coming to a close, there needs to be urgent measures put in place to prevent another cliff edge.

“Further support is needed from government to avoid a chaotic and abrupt halt in activity at the beginning of next year and keep the market moving at a time when the economy needs it the most.”

The housing market’s recovery will be threatened with drastic consequences for buyers and sellers if the stamp duty holiday isn’t extended beyond March 31 next year.

That’s the warning from Mark Hayward, chief executive of NAEA Propertymark.

“This boom has been hugely beneficial for the housing market; however, with a stamp duty cliff edge on March 31 we are calling on government to rethink these timings due to the increased pressure on service providers within the industry which is causing delays for buyers and sellers” he says.

“Failure to find a solution to the cliff edge, whether that be a taper or extension, could cause thousands of sales to fall at the final hurdle and have a knock on and drastic effect on the housing market which has recovered well from the Covid slump” Hayward adds.

The NAEA chief executive’s remarks come in the latest market snapshot from the association – relating back to September. It reveals that the number of prospective buyers registered per estate agent branch rose a third from 396 in August, to 525 in September.  This is the highest number of house hunters recorded since June 2004.

The average number of sales agreed per estate agent branch stood at 14 in September, the highest since August 2006. This is an increase from 12 sales agreed per branch in August.

Year-on-year, the number of sales per branch has increased 75 per cent.

Meanwhile the number of sales made to FTBs stood at 19 per cent in September – the lowest amount recorded since March 2013, when the figure also stood at 19 per cent. This is a fall from 23 per cent in August this year and 30 per cent in September 2019.

And the number of properties available per member branch stood at 41 in September, rising marginally from 40 in August.

Finally in terms of prices, in September just eight per cent of properties sold above the original asking price; this is a fall from August’s high when 13 per cent of properties sold for more.

The majority (53 per cent) of properties sold for less than the original asking price in September.

A London agency says it’s discovered the five key priorities that buyers want, following a survey of its own database.

“Lockdown and the continued challenges presented by the global pandemic have undoubtedly changed the way homebuyers think and act. We are noticing some quite significant shifts in mindset when it comes to the priorities and the wish-list of buyers seeking to move house or buy a new home in London” according to Clynton Nel, residential director at JOHNS&CO.

Based on enquiries across the agency’s seven offices in the capital it says buyers’ aspirations are:

– Views: Nel says these have previously played second fiddle to the interior of a property, with buyers seeing them as a ‘nice to have’ but not essential. “Now though, with homeowners having spent months staring out of their windows, often to brick walls, neighbours’ balconies or unsightly graffiti, the importance of a good view has increased significantly.”

– Outside Space: The agency’s Nine Elm’s office reported a 200 per cent increase in the proportion of buyers requesting private outside space.

– Room to Work: “Unsurprisingly, space to work effectively from home has also become a new must- have amongst buyers in London. With so many people forced to work in bedrooms or living rooms surrounded by other family members, having a dedicated workspace has become key. The look of that space is equally important given the prevalence of video conference calls so the rise of the ‘Zoom Room’ is a key trend to watch.”

– Peace and Quiet: An increasing number of buyers questioning the noise levels in the rest of the home, in particularly the living space given this is being used more frequently during daytime hours. The agency says one buyer was close to exchanging on an apartment in a new development, but after lockdown changed his mind and chose a different property on the other side of the building away from the street.

– Amenities: In the new build market JOHNS&CO notes an increasing demand for developments that offer a variety of on-site amenities. Concerns around local lockdowns have encouraged buyers to consider what is on offer within and around their buildings. The most asked-for amenity is currently shared workspace, so developments that offer a place outside of the apartment for residents to come and work are proving popular. Gyms, swimming pools and residents’ lounges are also increasingly requested features.

I had a wry smile when I read the article on Monday from the conveyancers complaining about people getting off their backs. It was quite fun.

The comments were also interesting. There is a serious disconnect between both sides and it is not going to resolve itself. Each side is blaming each other.

I am sorry to say that this issue is not going to go away anytime soon, quite simply because no one is managing expectations.

• Conveyancers need time to do what they have always done.
• Estate agents don’t have time, and perhaps don’t have the visibility to rest their impatience and frustration at the process taking so long.

It is that simple. That is the frustration. No expectation management and no visibility in understanding the process from both sides.

One comment from Tim stated: “Meanwhile IT this and that nonsense is floated about as some kind of solution or ‘tips for speeding up conveyancing’, which in the hands of a mediocre conveyancer does nothing.”

I might add a mediocre estate agent doesn’t help either, if you view it from the other perspective –  but let’s not digress.

Technology can help if systems are there to help and I know a lot of work from the government is trying to push through reforms to help conveyancers do their job, particularly around searches BUT let’s look at it with today in mind.

Technology may not help completely with the process itself but it can help, I believe, with managing expectations and clearly pointing out where flaws in the process (or conveyancer) exist.

If we can offer transparency to all sides, it may lessen the frustration and may allow the agent to manage the buyers and sellers to make for a more fluid transaction with less chance of falling through.

It may also keep the agents off the back of the conveyancers. But I can’t promise.

Let me explain.

Many, many firms focus on the quick wins of improving the transaction experience – I might even suggest the UK leads the way here given the sheer volume of companies that exist.

The ability for people to search for their next house. The ability to view the chosen few and then how to make the offer process more efficient.

Anybody can really get involved there. It is simple to understand, and easy to develop for.

Post-offer acceptance, it gets super complicated and more difficult for people outside of industry to understand what the hell is going on.

And this is the problem. When you put insecurity into the equation, it breeds frustration and concern into a transaction. Then everyone gets jumpy, estate agents get nervous of deals falling through and they put the pressure (and the blame) on conveyancers.

Two weeks ago, I mentioned the speeches I give and brought in my example of how iBuyers give ‘certainty’ to transactions.

This current argument – and it is just that – speaks to a second trend I mention. Transparency.

When I give these speeches, I generally try to make the companies I then showcase relevant to the audience I am speaking to. Yesterday, it was a Canadian conference and so the majority of companies were either Canadian or American.

The slide below shows some of the firms from yesterday’s presentation. You can see the iBuyers there with the American and Canadian slant. Then there are those that give transparency in the transaction process.

You will note they are only British firms. That is because we have leading firms that are helping the process. We should be embracing firms like these to help streamline this difficult time to aid both sides of the market.

Delays across the house buying sector mean those wanting to benefit from the stamp duty holiday need to begin the buying and selling process by November 1.

That’s the advice of the Legal & General Mortgage Club, which has tracked delays occurring because of the high transaction volumes in recent months.

L&GMC says in the majority of cases before the pandemic, a mortgage application for a consumer with straightforward circumstances took less than two weeks  to move to mortgage offer.

However, since the UK-wide lockdown ended, this process is taking much longer – around a third of its mortgage advisers told the club it was taking three to four weeks with a further third saying it is taking four to eight weeks. Those applicants with more complex backgrounds, such as those with impaired credit histories or who have been on furlough, may typically need six to eight weeks to get approved for a mortgage.

Conveyancers have told L&GMC that the time between offer and exchange is now taking three weeks, while the period between exchange and completion stands at one to two weeks. Responses from estate agents also indicated that the average time between receiving an offer on a property and completion has increased by some eight weeks.

The overall timeline for home buying, therefore, could be up to 15 weeks for a straightforward deal or up to 17 weeks for buyers with more complex requirements.

However, this figure does not take into account half term and Christmas holidays nor the impact of a possible second lockdown.

Legal & General therefore advises buyers to begin their search by November 1 to take advantage of the stamp duty holiday to give themselves enough breathing space should any issues arise before completion.

“Policy makers need to consider if a tapering of the Stamp Duty deadline is needed instead of a hard deadline. We need to avoid those moving or purchasing a home missing out through delays after 31 March when the holiday ends” says club director Kevin Roberts.