On Wednesday, the maximum saving as a result of the stamp duty holiday falls to £2,500 from £15,000. From lenders to conveyancers and solicitors, professionals are working “flat out” to get a bottle neck of deals through ahead of the deadline, according to Simon Gammon, Managing Partner of Knight Frank Finance.
Mortgage lending and house price growth remained at long-term highs in the final weeks leading up to the tapering of the stamp duty holiday, according to new data from Nationwide and the Bank of England.
Banks issued 87,500 loans for houses purchased during May, the Bank of England said on Tuesday. That’s up just 1% on the previous month and about a third above the long term average. Lenders have been issuing mortgages well above seasonal norms for several months, which created a build up of deals ahead of the June 30 deadline.
“Everybody is working flat out to squeeze a bottle neck of deals through,” said Simon Gammon, Managing Partner of Knight Frank Finance. “From lenders to conveyancers and solicitors, the whole system is under pressure, but its clear many businesses have increased their operational capacity in recent months which means many more consumers will be able to complete deals than might otherwise have been the case.”
On Wednesday, the maximum saving as a result of the stamp duty holiday falls to £2,500 from £15,000 in England. The holiday, introduced to support the economy during the height of the pandemic, has fuelled activity and underpinned record gains in house prices. Nationwide said on Tuesday that house prices climbed 13% in the year to June, the most since November 2004.
“House prices were driven higher by a supply squeeze as the UK came out of the pandemic, an effect seen in other sectors of the economy,” said Tom Bill, Head of UK Residential Research at Knight Frank. “If you add in a stamp duty holiday and the fact pent-up demand has been building for years against the uncertain backdrop of Brexit, the result has been a burst of house price inflation.”
Mr Bill said he expects UK house price growth to slow down after the summer, declining to mid-single digits by the end of 2021 as more supply comes through. The winding down of the stamp duty holiday and the return to a sense of normality is also likely to encourage more sellers to list their property, leading to a more balanced market.
“The figures are further proof that the stamp duty holiday has, thankfully, over-stayed its welcome,” Bill added. “It was the right thing to do at the height of the pandemic but the extended holiday has distorted patterns of activity and prices in the property market this year.”
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