Stamp duty extension needed as a mortgages are to be affected by lockdown & furlough plans

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Mortgage plans have been upended throughout 2020 as coronavirus and lockdowns rules delayed the buying process. To counter these problems, the government adjusted stamp duty rules, raising the threshold and lowering costs for buyers.

While these stamp duty changes are set to end in early 2021, calls have emerged for an extension of the support given that England is set to enter a second lockdown in the coming days.

Richard Pike, a director at Phoebus Software, commented on this changing dynamic: “A second national lockdown could deflate the housing market if an extension to the stamp duty holiday is not agreed.

“The current health of the housing market remains strong.

“However, even though we have experienced a national lockdown before, we are entering uncharted territories.

“We cannot be certain this latest lockdown will not jeopardise thousands of sales already in the pipeline.

“Knowing that completions are already facing major delays, the government must act to ensure those having started the process don’t fall at the final hurdle because of delays they have no control over.”

While the new lockdown rules will be disheartening for many, they do not appear to be as harsh as the measured introduced in March and, hopefully, are only set to last a month or so.

Martijn van der Heijden, the chief strategy officer at Habito, noted this, detailing certain administrative process associated with housing should thankfully be spared from repercussions: “The good news is that the housing market will remain open throughout this period and the Government has asked that everyone continue to play their part in reducing the spread of the virus by following the current guidance.

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“This means that you can still move home, that tradespeople can still carry out homework’s and that construction sites remain open.

“Right now, it’s not looking like a repeat of March’s lockdown when everything in the property market stopped overnight.”

However, in shared sentiment with Richard Pike, Martijn called for an extension of stamp duty benefits as delays are now more likely to occur: “That being said, it’s now more likely that we will see delays to home-buying services – such as conveyancing, and property surveys, as they adjust once again to tighter restrictions.

“This will be compounded by the rush of home buyers wanting to complete before March, to benefit from the stamp duty holiday.

“We now call on the Government to extend the stamp duty holiday beyond 31 March, to give more certainty to those concerned about missing the deadline, bring stability to a nervous market, and avoid a rush of property transactions being cancelled in February and March.”

Martijn concluded by providing insight into how new furlough rules could impact mortgages and what struggling customers can do to ease their stresses: “If you’re in the process of buying a new home and your financial circumstances change over the next few weeks, to make a new mortgage unaffordable, lenders have the right to withdraw their offer.

“For example, your offer could be impacted if you’re put on furlough. If you’re worried, do speak to your broker or lender about how it may affect you and your mortgage offer.

“If you’ve already got a mortgage, being put on furlough shouldn’t impact you.

“But, if your income falls and you need help making your monthly repayments, the good news is that the Covid-19 mortgage holiday scheme has now been extended…

“…Any homeowners considering taking a mortgage holiday for the first time should know that this is in no way a ‘holiday’.

“Interest will continue to accrue each month, and this will need to be repaid to their lender – either at the end of their mortgage or when their mortgage payment holiday ends.

“It’s a great tool for people who need it, but if your income is unlikely to be impacted, it’s better to continue to make your payments, as normal.”

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