Surging demand in the UK housing market has left an extra 140,000 buyers in the queue to finalise their home purchase, as the rush to beat the deadline on a temporary stamp duty holiday causes bottlenecks in the buying process.
The relaxation of pandemic restrictions brought the housing market roaring back to life in May, as people sought to move to properties more suitable for lockdown living.
About 418,000 sales are in the pipeline — compared with 280,000 at this point last year — for homes worth £112bn, according to Zoopla, the property website.
The stamp duty holiday on the first £500,000 of any transaction in England and Northern Ireland added fuel to the recovery, saving buyers up to £15,000 on a purchase. It has five months left to run, but housing market professionals have warned of delays in the legal and mortgage process as buyers race to complete purchases by March 31.
As many as 325,000 buyers face missing out on the tax saving, as the time between agreeing a sale and completing has expanded to an average of five months, according to separate research this week by consultancy TwentyCi.
Zoopla warned that in any normal year only 25 per cent of sales agreed in the first quarter complete by the end of March.
Extra pressure is bearing down on mortgage lenders, conveyancing solicitors and surveyors from the added workload. Tim Hyatt, head of estate agent Knight Frank’s UK residential business, said: “Any property that goes under offer in January, February or March risks not getting through [to completion] before the holiday ends.”
The biggest rise in sales agreed in the year to date has come in the south-east region, where sales volumes are up 15 per cent compared with the British average of 3 per cent, Zoopla said. Sales agreed in London and the east of England are up by 12 per cent and 11 per cent respectively. House prices are up 3 per cent over the past 12 months, compared with 1.1 per cent this time last year.
The problems facing buyers have prompted industry calls for an extension to the stamp duty holiday. Ian Lancaster, TwentyCi chief executive, said the government should act quickly to avoid political damage by announcing such an extension this week. “A buyer agreeing a sale this month or even next would naturally expect to benefit from the stamp duty holiday and they will be profoundly disappointed if they do not.”
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said transactions lost as a result of the stamp duty-related crunch could have a “devastating effect” on the property market and wider economy.
“The chancellor could extend or taper the scheme to avoid a ‘cliff edge’ or perhaps more constructively leave the concession in place just for first-time buyers, who are the lifeblood of the housing market. Either way, doing nothing is not an option.”
Mortgage lenders struggling to meet the appetite for home loans are curbing access to their products by putting up rates, offering “flash sales” for a single day only, toughening credit score criteria or withdrawing deals entirely from the market.
Buyers are also having to wait longer for local authority searches, where councils check a property and the surrounding area for any issues that might affect the value of the home.
According to Simpson Millar, a law firm, local authorities including Hackney, Chelmsford and Melton are taking more than a month to complete searches, up from less than a week in normal circumstances.