House prices face a “winter of discontent” as rising inflation drives up mortgage costs after years of near-zero interest rates. This could finally slow property price growth or even send it to into reverse, experts warn. Winter is coming so how worried should you be?

As food and energy prices go through the roof, the Bank of England will come under ever greater pressure to increase interest rates to curb inflation. Yesterday’s figures showing unemployment falling and job vacancies hitting a record high have raised the stakes. The BoE could make the first rate hike as soon as December, with more to follow in 2021.

If inflation continues to climb, that could finally bring the era of record low mortgage rates to a close.

Higher borrowing costs could bring today’s sky-high property prices back down to earth, while existing homeowners may struggle to service their mortgage repayments.

Experts are urging homeowners to lock into a long-term fixed-rate mortgage while interest rates remain at record lows.

Scott Taylor-Barr of Carl Summers Financial Services said the end of the stamp duty holiday and furlough, rising living costs and tax and National Insurance all threaten the housing market. “Add in the usual Christmas slowdown and we can expect the property market to lose some of the wind from its sails.”

Source: Daily Express

A petition for the triggering of the stamp duty upon exchange of contracts has been launched on the Government’s official petition website.

The campaign, launched last week, will run for six months. At the time of writing, it had already gained over 4,000 signatures.

In a statement to PropertyWire, the originator of the petition Chris Holland said: “People are finding themselves becoming trapped in a scenario whereby house prices are much higher, and at the same time they will now miss out on the stamp duty holiday. People are being financially punished from both sides, this from a policy that was designed to do the exact opposite.”

He added: “Exchanging contracts is exactly what it says. A contract, a legally binding agreement, to purchase a house often with an immediate 10% deposit being paid. So why shouldn’t you benefit from the stamp duty holiday being triggered at that moment of exchanging contracts, rather than at the point of completion? This will allow in particularly new build buyers, with continuous building delays due to COVID-19, to benefit from this policy.”

To sign the petition, please go here.

Source: PropertyWire

A dearth of supply abutting steady demand has caused housing prices within the UK to rise sharply, says the Royal Institution of Chartered Surveyors in its latest UK Residential Market Survey.

The survey found that buyer demand had remained steady and consistent across the UK, but that the number of fresh listings was ‘insufficient’.

Furthermore, the authors write, “The survey’s headline measure of house price growth rose again over the month, with a net balance of +75 per cent of respondents noting an increase in prices during April. This is up from a reading of +62 per cent back in March and has now become successively more elevated in each of the last three reports. Furthermore, all UK regions/countries are now seeing a sharp pick-up in house price inflation.”

There was much commentary across the industry on the report. Tahir Farooqui, CEO of Canopy, said: “There’s a risk that the property market is being artificially propped up by measures like the stamp duty holiday. While higher-earners and second steppers have got to swoop in on the buying frenzy and make the most of cut costs, sky-high house prices are making homeownership even further out of reach for hopeful first-time buyers. When the dust settles and the support schemes are taken away, securing an affordable mortgage will remain a pipedream for many.”

Farooqui said that there should be support for those trying to move from renting a property to buying one. One measure, he said, would be to make rent payments count towards a credit rating to help first-time buyers when it came time to purchase a property.

Others pointed to the stamp duty extension as being the catalyst for the current bullish market. Rich Horner, head of individual protection at MetLife, said: “The fear of missing out has placed immense power in the hands of sellers, with many listings being sold at inflated prices that would have been inconceivable a year ago. But the market knows that this level of activity and house price growth is not sustainable, it’s a question of when prices stabilise rather than if.”

Source: Property Wire

When the chancellor, Rishi Sunak, announced his budget on Wednesday, he talked about the government’s goal of turning generation rent into “generation buy”. The measures he outlined to help would-be homebuyers had been heavily trailed – an extension to the stamp duty holiday he launched last year for England and Northern Ireland, and a new UK scheme to bring back 95% mortgages. But the budget documents brought more detail. We have looked at the small print to see what the measures will mean for homebuyers.

The coronavirus pandemic has led to the virtual disappearance of mortgages that only require a 5% deposit – there were only five 95% loan-to-value (LTV) mortgage products available last month compared with 391 in March 2020, and those were specialist deals, according to the financial data provider Moneyfacts.

The initiative aims to encourage banks and building societies to offer 95% mortgages again. It will do this by giving them the chance to buy a guarantee on the portion of the mortgage between 80% and 95%. If a borrower gets into financial difficulty and their property is repossessed, the government will cover that chunk of the lender’s losses.

The scheme will open for new mortgage applications in April and run until the end of 2022.

Several of the country’s largest lenders, including Lloyds, NatWest, Santander, Barclays and HSBC, will be offering these 95% mortgages from next month, with others including Virgin Money due to follow shortly after.

This scheme is for any “creditworthy” household struggling to save for a higher deposit. These will be standard residential mortgages – so no second homes or buy-to-lets – and the property has to cost £600,000 or less.

The mortgages must be on a repayment basis, not interest-only. And borrowers will need to be credit checked and meet the standard rules on affordability.

The temporary stamp duty holiday is being extended in England and Northern Ireland. Until 30 June, the first £500,000 spent on a property will be tax-free, which means a saving of up to £15,000. After that, the threshold will drop to £250,000 until 30 September. It will then return to its normal level of £125,000. However, first-time buyers have a separate threshold, set at £300,000, and that will come back into play after June.

The first cut will have an impact on first-time buyers who are spending more than £300,000, and all other homebuyers.

For an existing homeowner planning to pay £450,000 for their new home, moving in before the end of June will mean a saving of £12,500 over the standard cost. If they complete in July, they will pay £10,000 – a saving of £2,500. It is still worth having but probably not enough incentive to try to start a new purchase to complete before the end of September.

Source: Guardian

The UK residential property market boomed in 2020, with house prices ending the year at a record high, despite the shutdown of the sector during the first coronavirus lockdown.

Government measures such as the stamp duty holiday helped revitalise the market, while the lifting of lockdown restrictions prompted a surge in demand.

Lockdown also inspired homeowners to consider moving house, as the shift to remote-working allowed city-dwellers to move further afield and hunt out properties with access to outdoor space.

However, the end of both the stamp duty holiday and Help to Buy this year, as well as the end of the furlough scheme – which is expected to cause a spike in unemployment – could lead to a more subdued housing market in 2021.

The latest nationwide lockdown and concerns over new variants of the virus are also expected to dent consumer confidence further – at least until the coronavirus vaccine roll out is complete.

Source: City AM

The average price of a house in the UK reached a record high of £253,374 in December but growth is slowing and prices may fall over the year, according to Britain’s biggest mortgage lender.

Halifax said UK house prices ended 2020 on average 6% higher than in 2019 as pent-up demand after the first national lockdown and the government’s stamp duty holiday spurred a homebuying boom.

The average UK house was worth £14,295 more in December last year than the same month in 2019.

“Prices soared as a result of pent-up demand, a desire among buyers for greater space and the time-limited incentive of the stamp duty holiday,” said Russell Galley, the managing director of Halifax.

However, the lender said the 0.2% rise in prices in December compared with November was the lowest rate of growth in the past six months of continuous gains.

Halifax said there might be enough “residual strength” in the market to sustain prices in the short-term, with mortgage approvals at a 13-year high. However, the end of the government’s stamp duty holiday on houses up to £500,000 at the end of March and the tightening of the help-to-buy scheme to new homeowners only from April, are set to take the steam out of the market.

“With the pace of the UK’s economic recovery expected to be constrained by the renewed national lockdown, and unemployment widely predicted to rise in the coming months, downward pressure remains likely as we move through 2021,” Galley said.

Last month, Halifax said it expected house prices in the UK to fall by up to 5% this year.

“What was first considered a mini-boom by the industry has gone further than many predicted,” said Miles Robinson, the head of mortgages at the online broker Trussle. “Mortgage approvals topped 100,000 in November, the highest on record since 2007. However, while the outlook is promising for the immediate future, we must remain cautious of a potential dip in spring as the stamp duty holiday and furlough schemes come to an end and the impact of a third national lockdown unravels.”

Howard Archer, the chief economic adviser to the EY Item Club, an economic forecasting group, said the latest report from Halifax suggested house prices “may just be starting to come off the boil”, and that the current resilience of the market was likely to become unsustainable sooner rather than later.

Source: Guardian

Landlords in England now need to give tenants six months’ notice to seek possession through the courts, up from three.

This will apply to all notices being served to both private and social tenancies from 29 August until March 2021, including Section 21s. However, there are some exceptions, as landlords can give four weeks’ notice to seek possession in cases of anti-social behaviour.

Simon Davis, president of the Law Society of England and Wales said: “This notice period extension will provide relief for those tenants facing eviction, and will give vulnerable tenants the time they need to seek help and find a new place to live.”

These changes come after the government extended the stay on evictions by a further four weeks, now ending on 20 September, and changes to court rules to manage court backlogs and prevent a spike in homelessness.

“The stay extension means courts can continue to make the necessary arrangements to manage cases safely during Covid-19.

“The government and the courts have also passed new court rules and provided extra protections to vulnerable tenants and those who have been significantly impacted by the pandemic.

“However, more needs to be done, including resolving the legal aid deserts currently preventing tenants in some areas from receiving legal advice and making wider legislative changes to prevent a spike in homelessness.”

Source: PropertyWire

The Chancellor has announced that from 8 July, the stamp duty threshold will be temporarily raised from £125,000 to £500,000.

The Chancellor Rishi Sunak has confirmed a major stamp duty cut in a bid to boost the housing market.

Speaking at the summer economic update, Sunak revealed plans to raise the stamp duty threshold from £125,000 to £500,000 in England and Northern Ireland.

The stamp duty holiday will start immediately and run until 31 March 2021.

It means that nearly nine out of 10 transactions will no longer be subject to stamp duty.

Meanwhile, the average stamp duty bill will fall by £4,500. And in London and the South East, home to more expensive properties, buyers could save up to £14,999 overnight.

Richard Donnell, research & insight director at Zoopla said: “The immediate increase in the stamp duty threshold will help sustain the rebound in housing market activity across England.

“The government will expect the change to stimulate more housing sales over the second half of the year and that savings made by buyers will be reinvested in home improvements, white goods and furniture, rather than bidding up the cost of housing.”

Here’s how the stamp duty holiday could impact you.

What is stamp duty?

Buyers must pay stamp duty when buying a home or piece of land worth £125,000 or more in England and Northern Ireland. It is charged on a tiered basis (so you only pay the higher rates on the slice above any threshold – the same as income tax).

These are the rates:

• Up to £125,000: 0%
• On the portion from £125,001 to £250,000: 2%
• On the portion from £250,001 to £925,000: 5%
• On the portion from £925,000 to £1.5m: 10%
• Above £1.5m: 12%

There are exemptions available for first-time buyers, who don’t have to pay stamp duty on the first £300,000, so long as the home doesn’t cost more than £500,000.

Meanwhile, people buying additional property for £40,000 or more, such as second homes, pay an extra 3% of stamp duty on top of regular stamp duty rates. The surcharge effectively works as a slab tax. In other words, the 3% loading applies to the entire purchase price of the property.

It is worth noting that stamp duty is different if the property or land is in Scotland or Wales.

So how will the stamp duty holiday work?

Sunak’s new measure means that buyers will only start to pay stamp duty on property above £500,000.

This will be for people buying their first home, or moving up or down the housing ladder.

These are the new holiday rates:

• Up to £500,000: 0%
• On the portion from £500,001 to £925,000: 5%
• On the portion from £925,001 to £1.5m: 10%
• Above £1.5m: 12%

The 3% stamp duty surcharge will apply on top of the new holiday rates, so people buying additional homes will attract a 3% stamp duty bill on the first £500,000 of property.

This will still result in a saving, because the 3% rate previously applied on the first £125,000, with higher rates above that.

Source: Zoopla

Hopes that the property market will survive the coronavirus pandemic without a major slump were raised today when one of Britain’s biggest housebuilders said it had seen dramatic surge in viewing appointments.

Taylor Wimpey said there had been a threefold increase in bookings in the final week of last month compared with the same time last year, as well as a 32 per cent rise in traffic on its website.

Since the start of the lockdown only 306 buyers have cancelled their purchases, lower than the 386 in the same nine-week period in 2019.

The company, which has major developments in London in Clerkenwell, the City, Mill Hill and Whetstone, said it had restarted construction “on the majority of its sites in England and Wales” and reopened most of its English sales centres and show homes.

All Taylor Wimpey’s furloughed staff have returned to work.

There was also brighter news from Britain’s biggest mortgage lender Halifax, which revealed that prices only fell 0.2 per cent last month, although it was the third successive monthly decline.

The average cost of a home in the UK dipped from £238,314 to £237,808, still 2.6 per cent higher than a year previously.

Halifax managing director Russell Galley said: “We expect market activity to increase progressively as restrictions are eased further across the whole of the UK and we continue to have confidence in the underlying health of the housing market over the long-term.”

But the effect of the virus in the motor sector continued with car maker Bentley expected to announce up to 1,000 job losses at its plant in Crewe today.

It will bring the jobs cuts this week alone to 3,000 after Aston Martin said it would shed 500 posts, and dealership Lookers warned of 1,500 redundancies.

Source: Homes & Property