Data released yesterday by HMRC reporting the numbers of residential completions in the UK in September shows 98,010 homes were sold during the month, a very similar level to September 2019 when 98,660 properties were sold, and a significant 21.3 percent increase on the number of completions in August this year, when 80,790 home buyers completed on their purchases. It’s thought that probably over 300,000 residential transactions were agreed before lockdown in March and were therefore put on hold during that period.
It’s highly likely that the vast majority of the completions recorded in September were as a result of sales agreed earlier in the year, rather than as a consequence of the introduction of the Stamp Duty Holiday in July.
Given the current average time to completion of five months, we probably won’t begin to see the real impact that Mr Sunak’s intervention has had on the property market until January, at the earliest.
Peter Ambrose, managing director of London property lawyers, The Partnership, said: “I don’t think these figures will surprise anyone who works in the property industry.
“August was a bumper month for many estate agents that we work with, although many of the deals we completed in August had been agreed before lockdown. They just took a quite a while to work their way through the system.
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“What we’re seeing now isn’t the result of the Stamp Duty holiday kicking in. That’s yet to come.”
Peter continued: “While we have seen a huge increase in deals over the past few weeks, and are expecting a busier than usual November and December, we think the busiest months will be early next year between January and March. This is completely different from previous years, as they are usually our quietest months.
“It’s looking like it’s going to be similar to the huge increase we last saw in the first quarter of 2016 before the introduction of additional Stamp Duty Land Tax on second homes and buy to let properties.
“Back then, completions rose to over 170,000 in March before the ‘cliff edge’ and then dropped back down to 73,500 in April. This might happen again, unless of course the current Stamp Duty holiday is extended.”
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Jeremy Leaf, former RICS residential chairman commented: “Although a little historic as these numbers reflect sales which were agreed at least some months previously, they help to show the resilience of the market during the economic and pandemic turmoil.
“What we have noticed since activity cooled a little over the last few weeks is that very few buyers are withdrawing from transactions and very few instructions are being withdrawn from sale. Prices are sometimes being renegotiated to take into account current realities. In other words, much the same as was happening immediately after lockdown at the end of March.”
Shaun Church, director at mortgage broker Private Finance said: “The housing market is full of mixed messages. Strong demand for property is putting upward pressure on prices, which is beneficial for existing homeowners.
“However, lenders are remaining extremely cautious and tightening lending, which is impacting first-time buyers’ ability to get on the property ladder.
“Rapidly shifting housing needs, driven by prolonged lockdown periods and the adoption of working from home practices, are also prompting a flight of people from city centres into areas with access to green space, often located in satellite towns.
“Price rises are eroding the savings buyers hoped to lock in from the Stamp Duty holiday. This may suppress buyer activity between now and March 2021.”
Shaun concluded: “Fears over the resurgence of coronavirus infections and resulting lockdown measures and the possibility of rising unemployment is putting downward pressure on consumer confidence.
“This could result in a sharp and sudden readjustment of property prices as the market responds to the UK’s pessimistic economic reality.”
As some towns and cities around the country go back into lockdown, this could create yet further delays to those who are currently in the process of buying or selling a property.
Worst case, if transaction times stretch much further, some buyers – particularly those in chains comprising of multiple transactions – may miss the completion deadline of March 31st, meaning they would have to pay the full amount of Stamp Duty due.
For those who want to buy but have not as yet put in an offer on a property, perhaps the best course of action is to factor into your financial calculations the amount you would have to pay in Stamp Duty if you don’t complete on your purchase in time to benefit from the current savings.
It could save a lot of tears, not to mention a substantial overdraft, a few months down the line.
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