Boosting housing transactions: key areas for the next government to address

Rory Joseph and Sebastian Murphy, directors at JLM Mortgage Services, explore what key measures a new government might introduce to improve the housing market.

Related topics:  Blogs,  Finance News,  Housing market
Rory Joseph and Sebastian Murphy | JLM Mortgage Services
19th June 2024
Sebastian Murphy Rory Murphy JLM
"Reducing stamp duty and speeding up conveyancing are important steps, but they must be part of a broader strategy that includes increasing the supply of housing."

For mortgage advisers and stakeholders in the UK housing market, the slow pace of housing transactions remains a huge challenge and dampens activity and income generation.

With the average time to complete a home sale now extending to 22 weeks, there are significant implications for everyone involved, especially us mortgage advisers who depend on timely completions to earn our fees, and for our pipeline to keep moving.

In the midst of this General Election, one thing we can be safe in saying is that the next UK government has a crucial role to play in improving this part of our market.

In other areas too, there is a clear requirement for key policy interventions, particularly around improving the conveyancing process and our existing taxation system which could significantly boost the number of housing transactions. Additionally, a holistic approach that includes increasing housing supply and addressing issues in the private rental sector is essential.

One of the most promising areas for government intervention could be stamp duty but unlike the first-time buyer focus we’ve seen over the last decade or so, there should be a renewed focus on those at the other end of the ladder.

The burden of this tax, particularly for older homeowners looking to downsize, is a significant barrier to increasing housing transactions.

In a recent podcast, Martin Lewis agreed with our advocacy for a targeted reduction in stamp duty for older homeowners’ downsizing. He called it “very, very clever" suggesting that lowering or eliminating stamp duty for those moving into smaller homes could free up larger properties for younger families and first-time buyers.

Older homeowners often face high costs not just from stamp duty but also from the overall expense of moving, which can include everything from hiring removal services to making necessary repairs on their current property before sale.

These costs, combined with the daunting prospect of a drawn-out sale process, discourage many from downsizing. By reducing stamp duty for this demographic, the government could significantly increase the mobility of older homeowners, thereby stimulating the housing market.

Another critical issue that requires immediate attention is the length of the conveyancing process. As mentioned above, it currently takes an average of 22 weeks to complete a property transaction.

This extended timeline has far-reaching consequences for buyers, sellers, and particularly mortgage advisers, who do not get paid until the transaction completes. Delays in conveyancing can derail property chains, leading to cancellations and financial losses for all parties involved.

To address this, the government needs to introduce measures that streamline and expedite the conveyancing process. Possible solutions could include increased digitalisation of property records, better integration of legal and financial systems, and improved regulatory oversight to ensure all parties adhere to timelines.

Reducing stamp duty and speeding up conveyancing are important steps, but they must be part of a broader strategy that includes increasing the supply of housing. The UK faces a chronic housing shortage, with demand far outstripping supply. The next government must prioritise building new homes, particularly affordable ones, to meet this demand.

Encouraging development in areas with high housing needs, providing incentives for builders to create affordable housing, and investing in infrastructure to support new developments are all essential components of this strategy. By increasing the availability of homes, the government can help stabilise the housing market, making it easier for first-time buyers to enter the market and for existing homeowners to find suitable properties.

The private rental sector also plays a crucial role in the housing ecosystem. For most potential homeowners, renting is the first step towards owning a home. However, the current shortage of rental properties has driven up rents, making it difficult for renters to save for a deposit. The government needs to address this issue by incentivising landlords – or simply not putting even more of a burden on them - to help them add more rental properties to portfolios.

Encouraging investment in the rental sector, ensuring fair regulations for landlords and tenants, and promoting rent-to-buy schemes could help ease the pressure on the rental market. By stabilising rents, the government can make it easier for renters to save for a deposit and eventually move into homeownership.

For mortgage advisers and other stakeholders in the housing market, the policies of the next UK government will be critical in shaping the future of housing transactions.

By focusing on these key areas, the government can create a more vibrant and efficient housing market, enabling more people to buy, sell, and move homes in a timely manner. For mortgage advisers, these changes could mean more transactions, faster completions, and a more stable income stream. And who is going to say no to that?

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