October was another strong month for house sales across the UK, with buyers tempted by the holiday on stamp duty. However, logistical delays in securing mortgages alongside Brexit fears and the end of the duty relief in March has resulted in experts at the Royal Institution of Chartered Surveyors warning of a “subdued” market in the longer term.
The stamp duty holiday has bolstered property sales throughout the autumn, but the tax relief has been overshadowed by the difficulties an increasing number of people have found in securing a mortgage. Low deposit 95% mortgages have all but disappeared from the market since August, and an ever dwindling number of lenders continue to offer 90% or 85% mortgages, which is causing significant difficulties for first-time buyers looking to enter the market.
Beyond the trouble in securing low deposit mortgages, banks and building societies have also been struggling to keep pace with the surge in demand at the end of lockdown, and buyers are left waiting months for the financing they require. And these delays are having a real impact on house sales, with nearly a quarter of agreed sales collapsing last month.
Beyond mortgage difficulties, the most common factor that prevents you from being able to sell your house fast is a break in the chain, and with the mortgage difficulties facing buyers this has become increasingly common. If the sale of your house is dependent on the buyer selling their property, and possibly the buyer of their property selling theirs, then any issues in a link could cause the whole chain to collapse. Indeed, buyers that can claim to be “chain-free” often manage to secure discounts when buying properties due to the difficulties and heartache a chain can cause.
Problems uncovered in home surveys can cause additional issues with sales, and it is a quirk of the English housing market that buyers are expected to pay for expensive surveys on the property they intend to purchase instead of the seller as happens in Scotland. These surveys are expensive, especially if carried out on a number of properties, but can also cause significant delays in the purchase process. Which? magazine recommends “sellers should consider having a survey done on their home before putting it on the market, especially if it’s an old or unusual property, or is in need of renovation, and take action to fix anything that could put buyers off”
Gazumping, where a new buyer outbids someone at the last minute, also continues to be a worry for house-buyers, especially when buying in highly sought-after areas. Gazumping tends to follow market trends, with the practice likely to become less common as the property market cools, but during a boom as many as a third of buyers report being gazumped on a house. There is little a buyer can do to avoid the chance of being gazumped, but property experts warn that buyers should be careful not to overextend themselves financially in an effort to win back a house if they are gazumped during a sale.
All of these issues facing house buyers will become increasingly important as the 31 March deadline on the stamp duty holiday looms. Legal & General Mortgage Club estimates that the average house sale takes 15 weeks from start to completion, which could cause as many as 200,000 buyers could end up paying thousands more for their new home.