Category: News

It may make little difference to agents but a leading analyst suggests thousands of buyers have effectively lost money on their purchase – even if they complete in time to secure the full stamp duty holiday saving.

PropTech analyst and market commentator Anthony Codling, in a post on his website Twindig, says since the announcement of the stamp duty holiday, house prices in 67 of the 380 areas reported by HM Land Registry have risen by an average of more than the maximum SDLT saving possible.

The 20 locations where typical house prices have risen in excess of the largest possible stamp duty saving are, unsurprisingly, in relatively affluent areas.

The top four, for example, are Hammersmith & Fulham, Kensington & Chelsea, Islington and Hackney, all in London and all with house price hikes of over £50,000 in recent months against a maximum stamp duty saving of £15,000.

The London boroughs of Brent and Ealing also make the top 10 as does Rutland, Oxford, Cotswolds and in Devon the South Hams.

However there are considerably more locations where buyers have genuinely made savings, despite rapidly rising prices.

The top 10 ‘winning’ areas include the City of London, Westminster, Camden and Richmond, all in London – the City of London in particular is a windfall for buyers, as Codling reports that the average house prices there has plummeted almost £80,000 since early July.

The director of a conveyancing technology company has hit out at what he calls “an over-reliance on outdated processes” and “age-old search delays” for hold-ups in processing transactions in the housing market.

Andy Sommerville, director of Search Acumen, says the now well-publicised combination of pent up demand from the spring lockdown and the stamp duty holiday have presented conveyancers with challenges.

Sommerville says the SDLT deadline of next March, in particular, has meant that public bodies have been swamped with requests.

And in a strongly-worded statement he says this has meant organisations including local councils and HM Land Registry have struggled to keep up.

He says: “Further, an overreliance on outdated processes has meant that age-old search delays are rearing their ugly head – slowing down the transaction process and threatening to hamper the benefits of the stamp duty scheme.”

Sommerville continues: “It is time the government acted decisively by tackling recurring delays in the property market through proper investment and an acceleration of its digitisation programme. While this won’t be resolved by March 31 2021, an industry-wide change in mindset is required now – not to mention a new approach to leveraging the available technology to harness the data at our fingertips.

“We saw evidence of an increase in firms adopting digital practices as a result of the pandemic. What’s needed now is commitment by all parties to collaborate, adopt the right technologies and build a more efficient property market. Only then will we be able to identify risks upfront, reduce uncertainty and progress transactions more effectively in the long term.”

His comments come after Search Acumen produced a market snapshot of the conveyancing sector, saying it has “regained its footing” in the third quarter of the year as demand returned to the property market.

The snapshot report says: “The [Search Acumen tracker] shows conveyancing volumes rose sharply by 105 per cent over the last quarter, climbing to 169,143 registered transactions in Q3 2020, up from 82,385 in Q2 2020. July was the busiest month, with 61,587 transactions completed.

“The surge can be largely attributed to the re-opening of the housing market following the spring lockdown, with the government’s stamp duty announcement likely to drive higher transaction volumes during the remainder of the year as consumers looked to take advantage of tax savings.”

Countrywide, which is thought to have closed over a fifth of its branches in recent years, has opened a new office in London.

It’s been widely publicised throughout the industry – but without detailed comment from the company itself – that some 50-plus Countrywide branches have closed this year alone. It’s also been reported that some 180 branch closures have taken place across the Countrywide network since 2016.

However the new office – a rare piece of positive news from the company – is in Cadogan Street, Chelsea, and is operating under the John D Wood & Co banner, one of two upmarket brands run by Countrywide.

Polly Ogden Duffy, managing director at John D Wood & Co. says, “Chelsea lies at the heart of our business, and our new Cadogan Street office is an important link in expanding our network into Knightsbridge … We remain proud to say that no other agent has more offices in the Royal Borough of Kensington and Chelsea.”

The company says the new office complements three other branches in Chelsea and Knightsbridge, and states: “Chelsea has long been an area where people aspire to live. The eclectic range of property styles mean there really is something for all tastes. From the grand crescents and garden squares, to the merchant houses of old Chelsea; artist studios to purpose-built blocks of all eras, and arguably the most well-known genre of all, the pastel coloured houses and cottages which run off King’s Road.”

Countrywide was asked for comment about the closure programme, and gave this response: “As we have said before where demand dictates we will open new branches and today we are delighted to be opening John D Wood & Co on Cadogan Street Chelsea (following strict Covid-secure guidelines).”

Countrywide remains the focus of a possible takeover by Connells; the deadline for confirmation of the proposed bid is 5pm on December 7.

Transactions appear to be edging higher than in 2019 for the first time this year – despite lockdowns and concerns caused by Coronavirus.

Comparison site GetAgent says transaction volumes across the whole of the UK were just 0.7 per cent lower in September 2020 than at the same month last year; in England alone, there have actually been 1.0 per cent more transactions in September over the 2019 level.

With the market having ground to a halt during the first UK-wide lockdown, property transactions in June of this year sat some 29 per cent lower than in 2019 at 83,860.

Even with the announcement of the stamp duty holiday in July, the lag of actually completing a sale meant that transactions sat 21 per cent lower than they did in 2019 and were also down 22 per cent in August.

However, the latest data for September shows a 16 per cent monthly uplift in transactions.

“The latest market data provides the best proof yet that the market has rebounded from the depths of pandemic paralysis, fuelled by a huge increase in homebuyer demand as a result of the stamp duty holiday. It’s the first time we’ve seen transaction levels exceed that of a year ago on a monthly basis since the market reopened for business and it looks to be the tip of the iceberg” says GetAgent founder Colby Short.

“With such overwhelming demand, the industry has struggled to cope causing huge backlogs of sales waiting to complete. However, as we continue to work tirelessly to clear this backlog, transaction numbers should continue to climb even higher over the next few months.”

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.”