"July has been dominated by the Government’s bold move on stamp duty, but it is already becoming clear that the unwinding of the furlough scheme will bring more problems to borrowers and brokers"
That said, the month got off to a bad start, with confirmation from Nationwide’s regular index that house prices had registered their first annual fall since 2012. Not unexpected, but even so it was taken as confirmation of how badly the property market had been hit.
That gloomy picture began to change over the first weekend of July, as rumours began to circulate that Rishi Sunak was poised to announce a stamp duty holiday in his autumn economic statement. If this wasn’t enough to put a spring in everybody’s step, the weekend also saw the long-anticipated reopening of hairdressers... and pubs!
Week commencing 6th July
After the weekend’s flurry of media briefings, the Chancellor duly followed through when he delivered his ‘mini-Budget’ on Wednesday 8th July, raising the stamp duty threshold in England to £500,000 with immediate effect, until 31st March next year. Cue a flurry of excited media comment about the impact this would have on stimulating the housing market.
This was not immediately matched, however, by activity in the market: the tail-end of the week saw a curious lull in criteria changes, as lenders digested the implications of the Chancellor’s announcement.
Week commencing 13th July
The market received a further shot in the arm the following week, with the announcement from HM Land Registry that it would begin accepting electronic signatures on deeds as an alternative to ‘wet ink’. This removes a small but significant obstacle, and also promises to speed up the homebuying process – another example of technology being put to good use.
This coincided with good news from lenders, responding to the stamp duty holiday. Nationwide for Intermediaries announced it was returning to 90% LTV lending for first-time buyers, while Santander and Accord were among the first lenders to announce they would allow cash in lieu of stamp duty incentives. This move was followed later in the week by Bank of Ireland.
We also saw Leeds Building Society resuming lending on holiday lets. This move, too, was soon followed by other lenders, as it became clear that lockdown and ongoing restrictions on foreign travel had made UK holiday homes a more desirable proposition.
With the furlough scheme beginning to unwind, there was also significant movement from lenders on how they would treat furloughed workers’ income and affordability: TSB, for example, announced they would only accept furlough income if it was being topped up by employers, and Nationwide restricted furloughed workers to a maximum 85% LTV.
Week commencing 20th July
Moving towards the final third of the month, we had a busy start to the week, with encouraging news from Rightmove that buyer enquiries were up by 75% compared to the same time last year, and that half the properties listed in May had already been marked as sold. Asking prices were also up by 3.7% on the previous year.
The latest statistics from HMRC also showed the market bouncing back strongly, with property transactions for June up by nearly a third on the previous month – although still down by a similar margin from last year’s figures.
The week also saw more lenders, including Hampshire and Mansfield Building Societies restoring lending on holiday lets. Meanwhile, there was further movement on furlough, with HSBC one of a string of lenders requiring a firm return to work date to be confirmed by employers.
The end of the week also saw another Government announcement, this time from the Housing Secretary Robert Jenrick, who set out proposals to expand Permitted Development Rights, enabling property owners to add storeys to existing properties and convert commercial premises to residential use with less planning red tape.
Week commencing 27th July
The final week of the month started off with mixed news. The good news was supplied by NAEA Propertymark, who reported that demand was up by around 25% in June, with both monthly and year-on-year sales increasing.
The not-so-good was from TSB, who announced they would no longer take applications from borrowers who had taken out three or more financial products in the preceding three months, or who had been late with a mortgage payment in the last year.
This pattern continued as the week wore on. Fleet and Accord Mortgages both announced increases in their maximum loan amount – to £1.5m and £2m respectively, while at the other end of the spectrum, Barclays temporarily stopped lending to portfolio landlords, in order to manage volumes.
As the month drew to a close, and the weather began to improve, Bank of Ireland announced significant changes to how it would treat furloughed workers, joining the ranks of lenders requiring a fixed return to work date, and excluding some variable sources of income.
One final fillip came with the revelation that Ministers were considering extending the deadline for Help to Buy completions, to help those whose applications had been hit by the lockdown, a move that has happily subsequently now been confirmed.
Overall, July has been dominated by the Government’s bold move on stamp duty, but it is already becoming clear that the unwinding of the furlough scheme will bring more problems to borrowers and brokers in the weeks and months to come. Late springs often give way to glorious summers, and this may well be the case for the property market this year. Here’s hoping that the stamp duty holiday is enough to keep the clouds at bay a little longer at least.
