The end of the stamp duty holiday, and any potential “market cliff-edge” that could come with it, is unlikely to impact the high-end section of the UK property market, according to Enness Global Mortgages.
A downward correction in property prices and transaction levels was expected to follow the expiry of the stamp duty holiday at the end of last month, with early signs of this decline materialising via a drop in mortgage approvals for the month of February.
But the government’s decided to extend the stamp duty holiday to as far as September for some homebuyers and market activity once again pick up the pace.
Islay Robinson, CEO of Enness Global Mortgages, said: “We’re currently seeing a very hot market driven by positive buyer sentiment, sentiment that has been fuelled by the low cost of borrowing and the additional saving in the form of a stamp duty holiday.
“However, we’re already seeing some lenders start to reign in their lending and tighten their criteria which is proving problematic for homebuyers in the lower price tiers of the market.
“While a stamp duty reprieve is enabling many of these buyers to boost their deposit savings pot in order to secure a mortgage, it suggests that the approaching cliff edge is going to be far steeper across these lower price thresholds when it does hit.
“In contrast, the high-end market has been building a slow but steady head of steam in recent months. While the stamp duty holiday has certainly been a nice saving to make, it has been far from the driving factor. Of course, those transacting at these higher price points are also much better placed when it comes to arranging finance and this isn’t dependent on interest rates remaining at record lows.
“As a result, while there is a very real chance the general market could derail come the end of the stamp duty holiday, this is unlikely to be the case for the high-end market and we expect this more natural return to form to continue far beyond September.”