This is according to analysis by Legal & General Mortgage Club, which is warning an ‘extraordinary’ level of demand experienced by lenders means buyers should allow four months to complete their transaction.
With the stamp duty holiday due to end on 31 March 2021, getting plans to sell and buy off the ground now will ensure you leave enough time to benefit from the chancellor’s stamp duty relief.
Since reopening after lockdown, the housing market had seen heightened levels of interest from buyers looking to press ahead with their housing plans.
But when chancellor Rishi Sunak announced a Stamp Duty holiday on the first £500,000 of a property’s value back in July the market went into overdrive.
Fast forward a few months and Legal & General is warning unprecedented demand in the market and the impact of Covid-19 has led to delays in the journey for many borrowers.
Kevin Roberts, director, Legal & General Mortgage Club said: “The government’s Stamp Duty holiday has helped to encourage many hopeful buyers to press ahead with their homeownership plans, providing a much-needed boost to the economy.
“However, those wishing to take advantage of the ‘holiday’ will need to plan carefully to avoid missing the March 2021 deadline, particularly if they have their own property to sell first.”
Delays
The Mortgage Club – which is network of mortgage brokers – surveyed a range of stakeholders in the housing market, including estate agents, surveyors, conveyancers, and housebuilders to build an estimated timeline for a typical housing journey given these delays.
The research has uncovered that before the pandemic, a mortgage application for a consumer with straightforward circumstances took less than two weeks (61%) to move to mortgage offer.
Yet, since the re-opening of the mortgage market, advisers have found that this process is taking much longer – 30% said it is taking three to four weeks with a further 32% saying it is taking four to eight weeks.
Furlough
Those with more complex backgrounds, such as those with impaired credit histories or who have been on furlough, may need to allow up to six to eight weeks (28%) to get approved for a mortgage.
It’s not just mortgage lenders who are experiencing delays. Conveyancers indicated 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 suggested the average time between receiving an offer on a property and completion has increased by some eight weeks.
Homebuying timeline
Legal & General Mortgage Club has analysed the data to build an average homebuying timeline, which could be up to 15 weeks or up to 17 weeks for buyers with more complex requirements.
But this did not take into account Christmas nor the impact of a possible second lockdown, and prospective buyers should take this into account in their plans.
Legal & General has therefore suggested that buyers need to begin their search by 1st November to take advantage of the Stamp Duty holiday to give themselves enough breathing space should any issues arise before completion.
Roberts added: “Buyers should speak to a mortgage adviser when creating a plan as these professionals understand how to navigate the ongoing changes to the mortgage and homebuying process.”
“As homebuyers rush to take advantage of the Stamp Duty holiday, 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.”
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