House buyers taking advantage of the government’s temporary £500,000 stamp duty threshold are being warned that some sellers may be forced to change their mind and stop the sale when the Job Retention Scheme closes at the end of October.
“Thousands of jobs have already been lost in the last few months, and many more are expected when the Scheme ends on the 30 October,” says Kate Bould, managing director of property search specialists Index West Midlands.
“While activity in the housing market has certainly increased since June, with surveyors and conveyancers reporting a rise in the number of enquiries and new instructions, the effects of the pandemic are still creating a great deal of long-term uncertainty,” she says.
“Once the Government’s Job Retention Scheme comes to an end and mortgage payment holidays are curbed, many people on the path to sell their home may be forced to reconsider their plans if it transpires their job security and personal financial situation sadly turns out to be uncertain.”
The Centre for Economics and Business Research has predicted that house prices will fall by five percent this year and a further 10.6 percent in 2021, with property analysts suggesting house prices won’t return to pre-pandemic levels until ‘at least’ 2023.
“Such a downbeat housing market prediction could put prospective buyers buoyed by the mini-Budget stamp duty cut, in a quandary over whether to take the plunge in the market now, or wait for prices to come down,” she comments.
“Additionally, current house prices are reported to have fallen in many areas and transaction levels are down, with some surveyors down-valuing the sale price, which can cause mortgage lenders to withdraw offers, and in turn, property sales to fall apart.”
The top reason for property sales being unsuccessful is said to be that the buyer simply changes their mind, as well as both buyers and sellers being seemingly happy to keep looking for a better deal even after an offer on a property has been accepted.
For property buyers concerned about financial losses from solicitors’ fees and land searches on aborted transactions, there is affordable protection available that will mitigate the risk, as Kate explains:
“For a one-off charge of as little as £20, buyers can take out specialist insurance that will help cover many of the costs incurred if the property chain falls apart, including solicitor’s fees.
“With an estimated one in four of house sales in England and Wales falling through before completion in a ‘normal’ economic climate, it is sage for all home buyers to take out this insurance at any time, not just now,” she says.
The Chancellor announced that home buyers will, until 31 March next year, no longer have to pay any stamp duty on the first £500,000 of a home’s purchase price, in his Summer Economic Update in July. Before then, the threshold where stamp duty started stood at £125,000 in England and Northern Ireland, or £300,000 for first-time buyers if they were buying a home worth less than £500,000. The tax holiday will save buyers as much as £15,000.
Index West Midlands provides conveyancing searches, including reports and property transaction solutions such as environmental risk factors, HS2, utility and telecommunications reports, for commercial and residential property lawyers, real estate and agriculture lawyers, across Warwickshire, Worcestershire, Herefordshire, Shropshire, Staffordshire and the Black Country. For more information: https://indexpi.co.uk/offices/westmidlands.html.
