Here’s what the property market is looking like right now – and what schemes could help you score your dream house
The impending end of the Stamp Duty holiday, the return of 5% deposits and the truth about shared ownership… Helen Griffiths, Head of Residential Property at Samuel Phillips Law (HLN’s Expert in Residence), gives us the low down
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What’s been the impact of the COVID pandemic on the property market?
The pandemic has actually had quite a positive impact on the property market. We’ve seen a staggering increase in the number of instructions fuelled by the Stamp Duty Land Tax [SDLT] holiday, and a desire from buyers to buy properties with gardens and office space to accommodate working from home.
We are, however, hearing reports of a lack of housing stock, which is also driving prices up – meaning that could effectively cancel out any SDLT savings. One thing we do know is it has been an exceptionally busy time for conveyancers and other professionals in the industry.
What pros and cons are there for moving home right now?
The most prevalent benefit to moving home at the moment is the Stamp Duty Land Tax holiday. Those who aren’t first-time buyers (and previously wouldn’t have benefitted from any form of relief) can now stretch their budgets a little further, as they won’t have to pay SDLT.
However, we are now at a very critical point as we’re fast approaching the deadline of 30th June, marking a tapered end to the tax holiday. Those looking to purchase now are unlikely to meet the deadline, so we may see transactions falling through as a result.
A lot has been made recently about the absence of 5% deposits in the market at the moment, with most mortgage providers insisting on upwards of 15% deposits. When do you predict smaller deposits will be an option for buyers again?
We are already seeing some lower deposit mortgages coming back to the market. The Government has launched a new mortgage guarantee scheme, whereby those with a 5% deposit can obtain a 95% mortgage and the Government will partially guarantee the repayment of the loan – reducing the risk to the lender.
What help is available for first-time buyers and those from lower-income backgrounds to get on the property ladder?
First time buyers can take advantage of the Help to Buy Equity Loan scheme, whereby the Government will lend up to 20% of the cost of a newly built home (40% in London). The repayment terms can be advantageous, as you don’t pay any interest for the first 5 years and, thereafter, the interest rates are comparatively low. It is worth bearing in mind that the loan covers up to 20% of the value of the property though, so if you want to repay the loan in the future, you will need to pay back 20% of the value of the property at that time.
Those from lower-income backgrounds can also benefit from the Shared Ownership Scheme, which can be a useful first step onto the housing ladder and allow you to increase your share in the property over a period of time.
Shared ownership seems to be a popular term at the moment. What exactly does it mean?
If you purchase a Shared Ownership Property, you will own a percentage of the property and the seller (usually a developer or management company) will own the remaining percentage. You’ll pay rent on the percentage that you do not own, but you can purchase further shares in the future. Eventually, you can purchase 100% of the shares. This is known as staircasing.
This can be a very affordable alternative when buying a home, as it allows you to purchase a little now and add to it at a later date, as and when is most affordable. There are plans for the Shared Ownership Scheme to be amended to make it even more accessible and easier for buyers to purchase additional shares in their property.
What advice would you give to first-time buyers?
Get your ducks in a row! Know what you can afford and what help is available. Speak to a financial advisor/mortgage broker so that you know what mortgage products are out there and the costs associated with them. Research the schemes available to help you get on the property ladder.
That’s not just for first-time buyers either, home movers can also benefit from some of the schemes available. Be realistic as to timescales for completion, particularly at the moment. Increased demand in the market has increased completion timescales and there are a number of factors influencing this. Arrange surveys at searches at an early date to speed up transactions as much as possible, and return forms and documentation as quickly as possible.
Speak to your conveyancer at an early stage to understand the process and steps involved in the conveyancing transaction and try to find out how many parties are in the chain, as this can also have an impact on timescales.
If you’re considering buying or selling your home, or you’re hoping to get onto the property ladder for the first time, and you’re looking for legal advice, visit Samuel Phillips Law, their Facebook page or call the firm on 0191 232 8451Visit Samuel Phillips Law