Running out of time for your house purchase?
It seems frightening to me that in late November, we are starting to run out of time to use the Stamp Duty holiday that ends on 31st March 2021 for your house purchase, but that is a reality at present. With the challenges of lenders delaying applications, most surveyors in semi lockdown, solicitors being overrun and searches taking an age to be returned, the reality is that if you haven’t agreed on a sale by early January you could very well miss the Stamp Duty holiday.
Stamp Duty Holiday
Seemingly Stamp Duty is the only thing going on holiday currently, and for the vast majority of our clients, that means a £15,000 saving when they come to your house purchase, which is no small number.
I’m sure most people are aware by now but there is no stamp duty to pay on the first £500,000 of a property value (which also includes Buy-To-Let, however, the 3% surcharge is applicable regardless of the value).
Looking at the rate at which the UK is racking up debt, with October being a PB in this area (an eye watering £22.3 billion), the likelihood of this being extended, or seeing any favourable tax breaks soon is not very high. The murmurings last week on hiking Capital Gains tells you all you need to know about the direction of travel over the coming years.
Lenders and Surveys
One positive we have seen in Lockdown 2.0 is that Surveys are now taking place much more quickly again, as many more mortgage valuations are being conducted online. This was the revelation of the first lockdown, in how quickly this was implemented, so the machinery is there ready to call on when needed.
However the high touch work from a valuation point of view of valuable properties (typically over £1m), flats, or complex property often will need a physical survey. So unless the property can be vacant for an inspection, this work will bottleneck into December (and possibly lockdown 3.0 come January…).
Talking of bottlenecks, lenders are still way behind where they would want to be currently. For most lenders, there is a 3-6 week delay in looking at mortgage cases for your house purchase. Which is all well and good, but if you get to the front of the queue and a question is asked or extra documents needed, you then go back round this loop. So it can take a couple of months to get an offer. Hence why March is starting to look very close by for us.
Assuming you have navigated the lender and survey process smoothly, there is then the legal work to get done. Many searches are taking far too long to come back, with most Local Authorities taking more than 20 working days (a month) to return their reports. So if you wait for the mortgage offer to be produced, as some solicitors recommend, it’s delays like this that can push you outside the timeframe you need to move by. So lets assume you find a new place to buy in December, you get the mortgage offer in mid-January (due to the delays around Christmas), you may not get all the required legal work done until mid-February (assuming everything goes smoothly) so it is still tight to arrange exchange and completion before the end of March. If you are in a chain, you’ll have to cross everything that there are no issues elsewhere in the chain either.
By engaging with a good broker (we are still seeing some lenders get mortgage offers produced in 2-5 days, for well packaged who then have an online valuation) and good solicitor (who will kick off their process ASAP without waiting for the mortgage offer) this will save precious weeks in the process, but even this far out it doesn’t take much to make the 31st March seem like a push… Scary, but true.
SWAP rates edged down a touch last week, and Libor slightly up, but overall, rates remaining quite flat after the jump up a few weeks back. That said, lending margins remain very high so we don’t see enough to change our view that staying on short term products offer the best value for now.
In the last week:
3 Month Sterling Libor = up by 0.005% to 0.047%
2 Year SWAP = down by 0.011% to 0.086%
5 Year SWAP = down by 0.034% to 0.266%
Bank of England Base Rate = Held at 0.10%
2 Year Variable from 1.19%
2 Year Fixed Rates from 1.04%
5 Year Fixed Rates from 1.32%
BTL Rates from 1.19%
The actual rate you will be offered will be dependent on your personal circumstance and deposit level. Please speak to one of our advisers so that they can guide you through this process
Source: Twenty7Tec November 2020
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