Act quickly to benefit from stamp duty holiday
- Published: Tuesday 20 October, 2020
- By: Commercial Trust
Stamp duty relief is currently available in England and Scotland on purchases which are completed before the end of March next year. But concerns are being raised about the gap between demand and the rate at which local councils can respond to search requests, effectively holding up the entire process.
On July 8th, Chancellor Rishi Sunak announced that the stamp duty rate reduction would be available on all property purchases until March 31st 2021, effective immediately.
However, delays throughout the purchase process have prompted three major conveyancing groups to submit an appeal to the Government to extend the holiday further.
Conveyancing trade bodies warn of delays
The Society of Licensed Conveyancers, Bold Legal Group, and the Conveyancing Association all believe that these delays will prevent landlords from completing purchases before the March 31st cut-off date.
Local councils are particularly struggling to keep up with a surge in demand following a lull in activity throughout the spring and summer. A combination of furloughed staff, redundancies, and Covid-related safety requirements, restricting council employees from returning to the office, have further inhibited their ability to match demand.
LandlordZone.co.uk reports that over one-third of local councils in England are taking three weeks to respond, with some facing backlogs over two months long.
The Conveyancing Association estimates that current circumstances are pressing against the deadline.
With November already right on our doorstep, investors pushing a purchase towards completion at this time of year must also take the usual Christmas delays into consideration.
What to do if you’re considering investing
In short, if you want to take advantage of the Government’s current offer, you need to move quickly.
When you speak with your broker, make sure they understand the pressing nature of your purchase. They will be able to guide you towards mortgage lenders who currently offer quicker turnaround times.
However, be aware that no broker can guarantee the timescale involved; once the case passes to the lender it is entirely in their hands.
You should expect, though, that your broker will act on your behalf to chase the lender for your preferred outcome.
Reduced stamp duty rates apply to all purchases under £500k, though landlords are still required to pay a 3% surcharge on additional properties. You can use our Buy To Let Stamp Duty Calculator to find out exactly how much stamp duty you would be required to pay on a new purchase.
Rental properties branded poor quality
Housing charity Shelter has branded England’s rental properties as poor quality, badly maintained and overpriced.
This criticism has emerged after research was carried out, which asked renters if they felt safe in their rental property during the coronavirus pandemic.
The report published by Shelter, claims that a third of tenants living in private rented accommodation in England live in homes that are poorly maintained with rents that unjustifiably expensive.
Recent research conducted by YouGov, which surveyed 5,000 tenants across England, showed that 35% of private renters live in what shelter would describe as poor conditions, suffering from infestation, dampness and electrical problems.
Shelter also protests that this would represent three million tenants in England, living in sub-standard rental accommodation.
Only 51% of private renters in England say that their home has made them feel safe during the coronavirus pandemic.
Polly Neate, chief executive at Shelter explained her concern, stating:
“Millions have spent months trapped in private rentals they do not trust to keep them safe. And right now, there is no light at the end of the tunnel”.
“After decades of decline, a dire lack of social homes means too many people, pay too much for cramped and poor-quality housing. Or worse yet, they find themselves with nowhere to live. With the stakes so high, the case for building decent social homes is clear.”
A well-known rental industry figure has supported Shelter’s displeasure, but insists that landlords are not to blame.
Mary-Anne Bowring, group managing director at Ringley and PropTech states that Shelter’s latest claim that tenants are feeling unsafe is ‘mostly justified’.
"The UK has some of the oldest housing stock in Europe, especially in the private rented sector, where the majority of homes are converted flats rather than purpose-built, so it comes as no surprise that three million renters report to be living in poor conditions.
"Fundamentally, this research is a damning indictment of our collective failure to build enough new homes of all types and tenures over the past few decades.
“However, it is important not to demonise landlords, many of whom have worked closely with their tenants during the pandemic and lockdown to reassure them about the security of their tenancy despite facing considerable financial uncertainty themselves.
“The government cannot expect buy to let investors to subsidise renters indefinitely and are now facing higher loan repayments as loan repayment holidays did not extend the term but increased the cost. We need to see firmer and greater action than what the Chancellor has announced when it comes to supporting households monetarily.”
Desperate need for more housing
Whilst shelter’s claims have been supported by some, the Local Government Association have provided a more reserved response, explaining that it is too premature to draw conclusions on how coronavirus has affected the private rental sector (PRS).
It is clear that there is a desperate need for more social housing in England.
However, the government’s existing provision for new social homes has been regarded as ‘woefully inadequate’ as there is only enough funding for one home for every 96 waiting households.
Although it may be considered too early to assess the impact of coronavirus on the PRS, it is quite evident that the pandemic has added to the urgent need for more housing for the people struggling in overcrowded temporary accommodation, and those that are struggling to find properties to rent.
Rental demand higher for houses than flats
There has been a notable rise in rental demand for houses, as tenants now require more space, new research shows.
Research conducted by Howsy, a property management firm, shows that tenant demand across 22 major cities is higher for houses in comparison with flats and apartments.
Howsy looked at what proportion of rental properties were being rented by tenants and how the demand has differed between the two property types.
The study reveals that the current rental demand for houses is currently at 29% while the demand for flats and apartments averages at 26%.
At a regional level, Belfast had the highest demand for houses at 69%, closely followed by Glasgow at 59%, Portsmouth at 49% and Sheffield at 30%.
The demand for rental homes was also higher than flats in Cardiff, Oxford, Newcastle, Cambridge, London, Leicester, Edinburgh and Aberdeen
Although, the pandemic is leading this trend for more space, flats continue to be more popular in some cities.
Manchester has the highest demand for flats at 57%, this type of rental property is also still popular in Liverpool at 53%.
Flats were also the most favourable in Birmingham, Nottingham, Leeds, Southampton, Bournemouth, Plymouth, Bristol, Swansea and Newport.
Calum Brannan, founder and CEO of Howsy, commented:
“There’s no denying that the current pandemic has caused a shift in tenant demand trends as many have looked for more space in the wake of initial lockdown restrictions.
“However, this trend hasn’t quite swept the nation completely and demand for flats and apartments remains robust in a number of major cities.”
Although there has been an increase in demand for houses, Brannan anticipates that flats will start to prove more popular when restrictions reduce and cities are allowed to reopen their doors professionally and socially.
“This will be welcome news for landlords who have seen demand for flats fall and have had to slash rental prices to secure a tenant.”
Shift in tenant demand
The rental market has seen a significant shift in tenant demand recently. Due to the Covid-19 pandemic, our homes are currently our first line of defence.
Rental properties outside of busy city centres are becoming more sought-after, as renters are now seeking properties in quieter neighbourhoods. This is likely due to the large amount of time that we have been spending at home, which has encouraged renters to find a property with more space and for some, a garden area.
In addition, people are now less constrained by a daily commute to work, thanks to the changing trends around working from home.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.