Author: Antony Antoniou

Government leaks to mainstream and building trade media suggest the controversial Help To Buy scheme will be extended beyond its end-of-2020 deadline.

An announcement is expected shortly.

Some suggestions say the extension could be just three months, to allow the clearance of as many as 18,000 H2B purchases delayed by Coronavirus, while other suggestions put the extension as considerably longer because of wider concerns about the economy and unemployment in the construction sector.

Either size extension would probably be controversial.

On the one hand, some agents and almost all housebuilders see the scheme as a means of improving their sales figures, especially to younger or first time buyers. Between its introduction in early 2013 and March this year – before the housing market was frozen – some 272,000 purchases had taken place via Help To Buy.

On the other hand, a slew of reports and analyses suggest that H2B does little to improve the quantity of housing stock and possibly increases prices – ironically making homes less affordable rather than more.

Last year a National Audit Office analysis revealed that 63 per cent of people buying a home under the scheme could have afforded to do so anyway; more households with incomes for £80,000 and above purchased via H2B than households with less than £30,000.

Bruce Burkitt, founder of the Property Experts consultancy, wrote last year in Estate Agent Today: “Developers are aware that Help to Buy is a closed market, and many properties are sold for premiums of 15 to 20 per cent, a surprising statistic that may come to harm first time buyers perhaps more than it is helping them.”

Recent figures suggest that the average price paid for a H2B property across the UK is some £307,000.

HM Land Registry is now accepting witnessed electronic signatures on documents for the  transfer of ownership of property, the creation of leases, and on securing mortgages.

It says this should allow a substantial simplification and faster execution of conveyancing – although it warns that some electronic signature providers may need to make some minor changes to meet its security requirements.

It will work like this: a conveyancer must  upload the deed to an online platform which sends a link to the signatories.

Once they have completed the necessary authentication checks, they would then ‘sign’ the document electronically in the physical presence of the witness who then also signs.

The conveyancer is then notified that the signing process has been concluded and, once they have effected completion of the deed, can submit the completed deed to HM Land Registry with their application for registration.

In every case the online platform would need to include two-factor authentication to authenticate the signatories and witness accessing the deed and provide assurance that unique individuals have signed.

A link to the document is emailed and then an authentication code sent to the individual’s mobile phone.

“What we have done today is remove the last strict requirement to print and sign a paper document in a home buying or other property transaction. This should help right now while lots of us are working at home, but it is also a keystone of a truly digital, secure and more efficient conveyancing process that we believe is well within reach” explains Simon Hayes, the Registry’s chief executive and chief land registrar.

“The more sophisticated qualified electronic signatures are a part of that vision and encouraging those is where our attention will be directed next” he adds.

Agents have almost unanimously been reporting a big surge in business since the reopening of the housing market, but new figures from HM Revenue & Customs suggest there is still some way to go before normal volumes are seen.

A total of 68,670 residential properties were sold in June according to HMRC data.

While this was predictably a huge 50 per cent up on May, it was still 31.5 per cent down on the same month a year ago.

The figures obviously pre-date the stamp duty holiday and other purchase tax changes in different parts of the UK, introduced only this month.

“Transactions, not more volatile house prices, are always a better indicator of market strength. These figures show activity is moving in the right direction but will clearly take time to be reflected in the figures as we emerge from lockdown and associated restrictions” notes former RICS residential chairman Jeremy Leaf, who also runs his own London estate agency.

“Nevertheless, we have noticed at street level that many buyers and sellers are bringing forward moving decisions to take advantage of the stamp duty holiday and continuing lower interest rates. There is still concern that improved conditions will be relatively short-lived as economic news deteriorates and furlough support falls away” he adds.

The chief analyst at online agency Yopa, Mike Scott, says it’s possible that these HMRC figures may be worse than reality.

“Note that these are provisional figures. Transaction data may be being processed more slowly than usual due to the effects of the pandemic, which means that there may still be more June sales to be reported and the true year-on-year fall may not be as bad as it is in this report” he suggests.

And Tomer Aboody, director of property lender MT Finance, says: “We are still below last year’s numbers, which in turn were down on the previous year, but confidence is creeping back up.

“If the government increases capital gains tax on principal home sales, it will push us back again so any progress made  by the stamp duty reduction will be swiftly lost. We need more stimulus via reduced stamp duty to the upper end of the market and hope for this in the autumn Budget.”