Backlog Warning Amid Booming Property Market

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2020 has been a thriving year for the housing market, according to recent reports. While this is great news in a difficult year, estate agents are warning that the unprecedented boom is causing delays in the moving process.  If you are looking to put your house on the market or purchase a property, you are advised to act quickly.

What has caused the property market surge?

As 2020 began, the breaking of the Brexit deadlock in Parliament and the new Prime Minister created greater economic certainty. This extra confidence saw a strong start to the year for the housing market, before the coronavirus pandemic took hold. With the lockdown came an inevitable pause, before things bounced back in May.

In fact, the lockdown helped to create a pent-up demand in both the rental and buyer’s market, as people had the opportunity to re-evaluate their lifestyles and work from home. According to the Financial Times, there are currently 418,000 sales in the pipeline, compared with 280,000 for the same period last year.

Where are the most affected areas?

The biggest rise in sales has been in the south-east region of the UK, with a 15% increase, compared with 3% for the rest of the UK. In London, sales agreed are up by 12%, with house prices also rising by 3%.  In the lettings market, Bristol, Glasgow, Bournemouth, and the outer boroughs of London performed strongly.

Why are buyers being advised to act quickly?

Thestamp duty holidaywhich was announced by the Chancellor Rishi Sunak on July 8th, to run until March 2021, has also fuelled the fire in the housing market.  The aim was to help the market recover from the economic shock caused by the pandemic. 

In normal times, stamp duty is a tax levied on the sale of all property and land in the UK over £125,000, or £300,000 for a first-time buyer. The rate of stamp duty you pay depends on the cost of your property and whereabouts in the UK it is. In Scotland and Wales, it is known as ‘land and buildings transaction tax’.

The holiday applies to all land and property sales in England and Northern Ireland up to £500,000, unless it is an additional property, in which case the rate will be up to 3%. It means that buyers will save an average of £5,000 on their purchase. In Scotland and Wales, the tax-break is for properties costing up to £250,000.

To take advantage of the stamp duty holiday, estate agents have warned homebuyers to act quickly, as the extra demand has created a bottleneck in the system. Getting a mortgage is taking up to twice as long as usual, and there are also pressures on the rest of the conveyancing system. 

In normal times, buying a house can take at least three months, so if you don’t start the process soon, you won’t be completed by the end of the stamp duty holiday on 31st March 2021. The new lockdown has also created extra delays.

Estate agents have called on the Chancellor to extend or taper off the stamp duty holiday to avoid a crash in the housing market during 2021, which would have a devastating impact on the wider economic recovery of the UK.