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Over the past year, the COVID-19 pandemic has generated endless uncertainty in the housing market. Many doubts remain over the future of the housing market once the stamp duty cut ends in April - leaving many buyers and sellers uncertain about their financial standing.
Our experts at 2020 Accountancy, have evaluated ways in which the pandemic has impacted the housing market and predicted what buyers can expect to see in the next few months.
Extension To Help to Buy Scheme
Earlier this month, the government announced an extension to the Help to Buy scheme, moving the deadline for completion and purchase of these homes until 31st May.
As a result of the pandemic, many construction workers have needed to self-isolate, supply lines have slowed, overseas labour may have needed to quarantine, and some traders have been furloughed causing delays in new build completion. This extension will provide members of the Help to Buy scheme an extra two months to complete developments.
The scheme, in its current form, is coming to an end in England. However, as of the end of January, there were 16,691 sales still to be completed under the current scheme. Many people are concerned that this extension will not give enough time to make up for the delays.
Stamp Duty Holiday
Potentially the largest impact on the housing market has been the introduction of the stamp duty holiday, imposed by the government last July. Mid-range buyers in more expensive parts of England are likely to be the biggest beneficiaries of the stamp duty cut, with savings of £10,000 on a £400,000 property and £15,000 on a £500,000 property.
This cut provided a much-needed boost to the housing market, with prices up 7.5% compared to last year. However, for many home-owners, buying a home based on the stamp duty cut alone could be a dangerous move. With the large incentive to buy covering high prices, you may end up paying a premium now and seeing the property's value fall over the next 12 months.
Impact Of Furlough And Lockdown
Furlough has also had a large impact on the housing market, in regards to impacting individuals' ability to apply for a mortgage. When the property market reopened last May, banks generally allowed mortgage applications from people on furlough. However, that has since changed, with some of the biggest lenders now refusing to consider furloughed income at all.
Furthermore, lockdown itself has impacted the housing market. Mortgage lender, Halifax, said the market would slow over the coming months because of new coronavirus lockdown rules and a weaker economic backdrop.
These are just a few of the things that buyers and sellers should keep in mind when entering the property market during the pandemic. With legislation frequently adapting to this uncertain environment, all those making a major transaction should be wary.
Are you uncertain on the financial impact entering the property market could have? Get in touch with our team for financial advice.