Catch-22 for the property market
Emma Coffey is head of sales at Goldsmith Williams solicitors
It has not been a great week for those considering the roofs that will remain over their heads in coming years, as uncertainly continues to cloud the property market.
The country is facing a “critical rental shortage” with at least 1.8 million households looking to rent rather than buy a home by 2025, the Royal Institute of Chartered Surveyors (Rics) this week claimed.
Meanwhile, the government has announced that the Help to Buy mortgage guarantee scheme will be closed by the end of the year. The scheme helped more than 86,000 households, many buying lower-value properties, to secure a mortgage.
Then there is the uncertainty of Brexit – with Prime Minister Theresa May alluding to the imminent triggering of Article 50 – no doubt lowering confidence in the property market.
Did we mention the stamp duty change? Anyone buying a home that is not their main residence must now pay a 3% stamp duty charge, potentially affecting further investment in property by landlords.
New house building, in general, is at half the levels it was at in its 2007 peak, which even then was only enough to meet around half of the market demand.
What we are left with could be a bleak scenario for those considering their future living arrangements…. Fewer houses to rent; little support to help first-time buyers; more people to house.
As if navigating the property market wasn’t difficult enough!
So, practically, what can be done?
If you have your heart set on purchasing a home, it may be worthwhile to enlist the assistance of a mortgage broker, who should have the market insight required to secure you a good deal despite the turbulent times.
A reputable mortgage broker is best placed to give you clear and impartial advice on higher loan-to-value lending, which for many first-home buyers could be up to 95%.
Brokers can be of particular help if your circumstances are unusual – maybe your earnings are freelance or your need a bridging loan – and indeed, a little help from an expert never goes astray.
As for landlords, Rics has outlined a number of solutions that could be put in place by the government to ease the difficulty in purchasing new properties to add to the rental market.
These include a reversal in stamp duty charges; pension funds be given tax breaks to fund large-scale rental properties; and councils encouraged to release brownfield sites for building homes for tenants.
Some of these changes however, could in turn infuriate potential first-time buyers, who may become outbid by buy-to-let investors.
Can you see the circle?
These are turbulent times and either way, it is always worth enlisting the help of a trained professional to provide you with the expert advice necessary to navigate today’s changing property market.