Shaun Almond is managing director of HL Partnership
At what point do you tell customers that they have little or no chance of getting their purchase completed before the end of the stamp duty holiday? Is it actually the responsibility of the adviser to warn that completion might not take place on time?
We all know that the lending process is creaking under the volume of new cases, and with house sales reportedly up 50% on the same time last year, it’s not going to get any easier. Of course, it is not just the lending mechanism under pressure.
Reports suggesting that searches by local authorities are already taking up to 60 days in some areas are not encouraging. It is at times like this that advisers feel powerless to intervene in any meaningful way and, of course, customers will complain.
Advisers have been building their businesses on a reputation for great service, so when delays and additional paperwork impact the house buying process, it’s easy to see how complaints can happen. I believe much of that is hugely undeserved and is usually sparked by processing issues at times of maximum new business pressure, which in turn can be amplified by valuation and conveyancing anomalies.
Going back to the potential for a meltdown on 31 March, there are still roughly five months to go, and we would all agree that in normal circumstances there would be no problem, but as we all know by now, these are hardly ordinary times.
The stamp duty holiday announced by the Chancellor added to the pent up demand created by the lockdown, and has led to a stronger bull market, particularly for sellers.
Most lenders are still reintegrating their workflows to accommodate home working, and many have struggled to keep up with the prodigious demand.
With COVID restrictions meaning valuations are taking longer, added to conveyancers’ reports that there are delays completing the formal requirements to ensure the legal transfer of title, we could end up creating a perfect storm of consequences that might very well mean that unless the stamp duty deadline is extended, many transactions will not complete in time to take advantage.
What happens on 31 March is anyone’s guess at the moment if completions don’t happen in time. Will those who miss the boat through no fault of their own and therefore do not qualify for the stamp duty reduction, suddenly have to find up to £15,000 from their savings, or will loans have to be renegotiated upwards to cover the additional tax?
It doesn’t end there. Will the chain break all together as loan affordability becomes challenged, or do sellers have to reduce the price of their home to keep the deal alive?
Certainly, it will be a nervous time for everyone involved in the mortgage process, but especially for those who will have exchanged before the end of March and have an obligation to purchase or lose a deposit.
Estate agents and mortgage brokers have been the main beneficiaries of the property boom. Any self respecting adviser is unlikely to tell customers not to pursue a purchase, just as estate agents won’t lock their doors to keep would-be buyers away, but a warning to customers about a possible negative outcome would at least provide more than a fig leaf in the event of customers failing to complete.
Already the industry is beginning to lobby government to reconsider the hard and fast date of 31 March. Given the clear consequences of leaving matters as they are, perhaps there will be a compromise.
However, as I write this, the new lockdown has just been announced and, with everything else COVID-related clamouring for attention, the chances are that housing market concerns may not be heard.
Unlike the first lockdown, though, the housing market has not been stopped from operating, which is a bonus for all of us in the sector.
It could be that the restrictions on contact and travel will begin to choke off current demand and reduce the impact of the stampede to complete by 31 March.
I would leave you with one thought: imagine where we would be now if the Chancellor had not agreed a stamp duty holiday as part of his COVID-19 stimulus package?
As an industry, we must accept that we do not have second sight, but still expect others to have that gift.