Prospective homebuyers are being prevented from taking advantage of the stamp duty holiday by issues with mortgages, a bridging lender has warned.
A survey of 1,250 homeowners and buyers by Market Financial Solutions found a third (32 per cent) of prospective buyers had been denied a mortgage following the introduction of the stamp duty holiday.
The research, conducted between August 28 and September 1, also found that half (52 per cent) of current homeowners wanted to take advantage of the stamp duty cut to buy a new property, but were concerned about their ability to get a mortgage.
Additionally, 46 per cent of people surveyed, who had bought a property this year, said they had encountered significant delays or complications when applying for a mortgage from a bank.
Almost two-fifths (38 per cent) of current house-hunters reported the same experience.
Paresh Raja, CEO of Market Financial Solutions, said: “The stamp duty holiday has already had a positive effect on the UK property market, sparking much more activity among buyers and sellers. However, today’s research shows that many prospective homebuyers are unable to take advantage of this initiative.
“Frustratingly, this is often due to the challenges of securing a mortgage, which are beyond buyers’ control. Many banks are treading carefully and, as a result, applications are taking longer to process and there is a higher chance of an application being rejected. This is putting property chains at risk of collapsing.
“At this point in time, it is important that lenders keep lending – they must ensure buyers have access to the finance needed to complete on a purchase. Failing this, the stamp duty holiday will only have a limited effect.”
Joanne Chapman, director and adviser at Plus Financial, said she had seen a surge in enquiries recently as homebuyers scrambled to take advantage of the stamp duty relief. But there appeared to be a reluctance among lenders to underwrite the loans.
She said: “Lenders appear very concerned about the future state of the housing market and borrowers’ ongoing ability to afford the repayments. As such, they are introducing much stricter lending criteria which many homebuyers are falling foul of. This is being reflected in the number of applications being declined."
Ms Chapman added: “Such stricter lending criteria is only likely to compound the problem and have a detrimental effect on house prices, as supply begins to outstrip demand. In turn, this will make it even harder to borrow as lenders get concerned over falling house prices and homeowner equity being eroded.
"I’d like to see the chancellor and the lenders develop a realistic and sustainable solution to the current problem because right now, there are no winners.”
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