Welcome to 2021
George Gee is commercial director at Foundation Home Loans
Here we are, a new year and I always feel a sense of optimism about what is to come, but perhaps especially this year given the incredible challenges of 2020 and the hope with which we start 2021.
At Foundation, we believe we are particularly well placed for a strong year; our appetite to lend, our focus on key sectors and borrower needs, the commitment of our team, and the relationships we have managed to cement with advisers in recent times.
That said, I think it’s very difficult to look even more than a few months into the future, predominantly because of the stamp duty holiday deadline that is racing into focus.
At the time of writing, in a response to a petition asking for the deadline to be extended, the Government appears to have ruled that option out. There have been many calls for, at the very least, a tapering to the deadline to allow those already in the process to complete beyond the 31st March and still secure the stamp duty saving. Others want a full-scale extension of 3/6/9/12 months.
Given the Treasury response to the petition which can be summed up by the sentence, ‘The government does not plan to extend this temporary relief’, all of those options now look unlikely. Never say never of course, and as Lockdown 3 continues, the pressure for an extension will almost certainly return.
So, what does this mean? Well, it certainly proves the value of prioritisation when it comes to pipeline business pre-Christmas and I hope advisers have felt they have been working with lenders who have been doing everything they can in order to move cases through the pipeline and give them the very best chance of completing by the deadline.
This was certainly a choice we made at Foundation back in November and it’s one that, given the latest statistics around purchase intent, should hopefully bear fruit. The striking data from The Guild of Property Professionals’ buyer research last month shows what may happen to a large number of transactions if it is felt completion can’t be achieved by the deadline date.
The guild asked 1,000 buyers in mid-December what they would do if it looked like their transaction would not complete pre-31st March.
Close to a third (31%) said they would pull out – Zoopla recently said there were currently 418,000 property sales progressing towards completion; extrapolated out that could mean close to 130,000 sales aborted, and it won’t need me to tell you what that means in wasted costs, resource and obviously income for advisers.
Of course, it’s very difficult to say just how many of that number – who have already embarked on their property journey – would be willing to pull out completely if a pre-31st March completion begins to look unlikely.
Certainly, all stakeholders involved would be doing everything in their power to get cases to completion and I think it’s possible that, with everyone burning the midnight oil, significant numbers of transactions can still get there.
Our aim over the course of the next three months is of course to ensure we have all the resources, in the right places, in order to do our very best for every borrower. Just prior to Christmas we announced how we would accept ‘No-Search Indemnity Insurance’ for both purchase and remortgage transactions – although not for HMOs or MUBs – with the policy available in lieu of Local Authority and/or other searches.
This was because we have been aware for some time that securing searches, particularly from over-pressured and under-resourced Local Authorities, was taking longer and longer, and we didn’t want this part of the process to hold-up the whole transaction.
Such a decision should speed up the conveyancing process through to completion and is hopefully taking away another potential obstacle in terms of meeting the deadline.
What none of us can do however is guarantee a pre-31st March completion, but hopefully as we embark upon this new year, we are able to introduce such measures and do everything we can to take as many cases through to their final destination.
It will be a busy quarter ahead, of that there is no doubt, but I have no doubt it can be a very successful one for the vast majority of clients.