ResidentialSep 11 2020

Warning over 2021 ‘double cliff edge’ for home buyers

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Warning over 2021 ‘double cliff edge’ for home buyers
Credit: Chris Ratcliffe/Bloomberg

A warning has been sounded over a “double cliff edge” for home buyers with the current Help to Buy scheme and reduced stamp duty rates both due to end in March.

Speaking at a panel debate during Kensington Mortgages’ new build forum earlier this week (September 8) Craig Hall, head of broker relationships and propositions at Legal & General Mortgage Club, described the Help to Buy scheme as “extremely successful” over the past few years.

Mr Hall commented: “It’s a bizarre crossroads and I guess also pointing towards a bit of a double cliff edge, with the stamp duty holiday due to end at the same time as [the current] Help to Buy scheme”.

Data from the Ministry of Housing, Communities and Local Government for April 1, 2013 to March 31, 2020 showed the value of Help to Buy equity loans reached £16bn in England since its launch.

Separate figures from Moneyfacts, meanwhile, show the number of mortgage deals at 90 to 100 per cent has fallen dramatically from 1,172 in September 2019 to 76 this month.

Mr Hall said: “[Many] lenders are struggling to get to the high LTVs, so in many regards at the moment, particularly for first-time buyers or those with a smaller deposit, all roads are pointing towards new-build, because of Help to Buy and the fact you only need to put in 5 per cent”.

Also at the panel debate, Craig McKinlay, new business director at Kensington Mortgages, described returning to its “pre-Covid product range” as a priority.

Mr McKinlay said: “[Pre-Covid] we were at 95 per cent lending for non-new-build, and for new-build we were at 90 per cent LTV for both flats and houses; we need to get back to that.

“We’re not there at the moment; we’re at 85 per cent, for new-build as well, so we need to get back to 90 per cent, which I'm confident we’ll do in the coming weeks and months and substantially before the Help to Buy changes.”

The current Help to Buy equity loan scheme in England is due to be replaced from April 2021, with a new scheme restricted to first-time buyers. Regional property price caps will also apply.

Meanwhile, the residential stamp duty threshold will revert from £500,000 to £125,000.

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