UK house buyers and sellers now wait for almost ten months to get their hands on keys and cash as the demand for property sees councils and legal professionals buried under an avalanche of admin.
A deep dive into data from property websites and the Land Registry has revealed the runaway impact of the stamp-duty reprieve for properties worth up to half a million pounds, which was introduced in July last year to keep the housing market afloat in the face of Covid lockdowns.
The resulting stampede to complete purchases worth up to £500,000, potentially saving up to £15,000 in tax, means the average time from listing a property to handing over the keys is up by a month and a half compared with this time last year.
The average time to accept an offer was down by 14 days to 124 days by the end of 2020, compared with the first half of the year when sellers were waiting an average of 138 days, as homebuyer demand recovered from the economic uncertainty of the first days of the pandemic.
But when it comes to completion – the notoriously fickle final stage of the transaction – the huge influx of buyers has caused delays.
The total time to sell – from the initial listing of a property to the sale being recorded by the Land Registry as complete – is now an average of 295 days compared with 240 days pre-pandemic.
“They say that all good things must come to an end, and while true, the Budget has delayed this reality for many homebuyers with regard to the current stamp-duty holiday,” says Colby Short, CEO of estate agent comparison site GetAgent.co.uk, which conducted the analysis.
“However, while the holiday itself has helped boost buyer demand and the speed at which sales are being agreed, this has come with a small-print catch in the form of substantial market delays during the tail end of the transaction process.
“It is now taking more than six weeks longer to complete a sale than it was the previous year, and this can feel like an eternity, as anyone who has bought or sold a house will tell you.
“Unfortunately, there isn’t much you can do to bypass this backlog other than sit tight and be patient. At least, at present, those currently delayed will have the reward of thousands saved in stamp duty when they do finally come to their completion date.”
Chancellor Rishi Sunak bowed to pressure to extend the holiday in England, Northern Ireland and Wales until the end of June, before the threshold drops to £250,000 until the end of September, and finally reverts back to all properties worth £125,000 or more being subject to stamp duty.
With one in four of all property deals falling through before the pandemic, fears had been growing that the original “cliff-edge” deadline, with thousands of buyers potentially withdrawing from the process as their tax bill suddenly hiked back up, could have a huge impact on the industry.
Rather than giving more time to would-be buyers yet to secure a deal, the completion delays mean the extension is only likely to reduce the chance of thousands of deals that are already in progress falling through because they failed to complete before the original deadline.
Meanwhile, the stamp-duty holiday has been so successful in propping up the market that average prices have increased by more than 5 per cent over the last year, despite the worst the virus could throw at the economy.
The increase means any savings on stamp duty have been largely obliterated by higher purchase costs anyway. And with Sunak’s announcement widely anticipated, and more help offered in the form of mortgage guarantees, the property market, for now at least, is still going strong in a period that is usually quiet.
“Traditionally, the property market is quieter at the beginning of the year and Spring tends to spark a change in buyer momentum. Despite this, we saw a 15 per cent increase in mortgage applications in January and a 17 per cent increase in February, when comparing the same periods year on year,” says Miles Robinson, head of mortgages at online mortgage broker Trussle.
“It seems that buyer demand continues to overpower any coronavirus-linked uncertainty as people look beyond lockdown and plan for the future.
“Following the Budget announcement of an extension to the stamp-duty holiday and a new 95 per cent mortgage guarantee scheme, buyer demand is likely to stay strong. The 95 per cent mortgage guarantee scheme is likely to entice buyers with smaller deposits back to the market.
“However, for those buyers who are yet to begin their home ownership journey and hope to benefit from the tax relief, the proposed stamp-duty holiday extension won’t be long enough.
“All buyers hoping to complete on a property worth £250,000 or higher before the end of June should use a stamp-duty calculator to help to factor in potential stamp-duty fees to avoid any unexpected costs should their sale not complete in time.”
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