We need to stop blaming the dysfunctional housing market on the stamp duty extension
Ray Harriot, founder of Reliable Property Group
It’s clear that without a stamp duty holiday extension, January through March will be a crunch period for buyers. Many will be putting the pressure on their solicitors and mortgage brokers to get their transactions completed before the March 31st deadline. Some will even look to cut corners, such as looking past issues highlighted on their survey, which could cost them in the long run more than what they will initially save on stamp duty.
The sheer volume of purchases currently in the pipeline, combined with the pandemic restrictions slowing down each step of the buying process (everything from viewings to surveys) has meant buyers now face an average 15 week wait to complete a purchase. This average already takes us up close to the end of March, meaning that hundreds of thousands of these purchases will potentially fall through in the cases where buyers are at the upper end of their budget when accounting for the stamp duty savings.
However, while it is easy to put the blame on the stamp duty holiday, it’s simply masking a problem that has been there all along; the UK’s extremely inefficient house buying ecosystem. The three separate entities of conveyancing, surveys and mortgage brokers are each working to their own agenda and timeframe. The buyer is placed in a difficult negotiating position between the three, whilst also at the mercy of estate agents who will push for the highest price and the quickest turnaround to make their commission
An extension to the stamp duty freeze would only delay these problems being addressed. The system urgently needs upgrading in two ways.
Firstly, estate agents need to be regulated, just like every other industry body, to manage the extent of their control over both the buyer and seller. They are the first point of contact for buyers, and therefore buyers will trust their guidance around things like how to respond to surveys and which mortgage broker to engage with. In reality, buyers need to be aware that estate agents are driven by completing the sale at as high a value as possible – which could mean letting issues highlighted on the survey slide. This isn’t fair on buyers, especially first time buyers who lack the experience of the process to know that that estate agent’s advice is rarely impartial.
While some would argue the unregulated nature of estate agents drives the market to be more competitive, this cuts new buyers out and can massively delay proceedings. Right now, estate agents will be heaping the pressure on buyers to complete ASAP so they can meet their end of year targets. Buyers should not be pushed to make rash decisions, and the “firesale” we will see this December of rushed completions leading to issues down the line will show why we need estate agent regulation.
Secondly, the government needs to do much more to reduce the barrier for first time buyers joining the market. Financially this would involve re-evaluating the Help to Buy scheme, possibly underwriting a percentage of the deposit for first time buyers. This could then go on to stimulate the housing market for the next 10 to 15 years as these buyers continue to buy and sell in an active environment.
Reducing the barriers to entry also means much better support and education on the whole process so that buyers can know how best to streamline their purchase. The goal is to make sure buyers aren’t put off from the daunting task that the majority of individuals describe as one of life’s most stressful experiences.