“Stamp Duty needs a proper rethink, especially right now, and you can quote me on that” says Ben Thompson, Deputy CEO at Mortgage Advice Bureau, at the end of our discussion on the current state of the UK property market.
In an interview with Today’s Conveyancer, Ben Thompson, Deputy Chief Executive Officer of Mortgage Advice Bureau looks ahead with his predictions for the property market over the next 12 months and beyond.
Tell us about what you’ve seen in the last 9 months
In brief the year can be split into three distinct segments; Q1 was the Boris bounce, when the country finally felt like looking up a bit instead of navel gazing and the market was beginning to move.
Q2 was completely unforeseen and very difficult for everyone. The big positive I take away from that period is the way the industry pulled together to come up with a collective plan for how it was going to be able re-open safely. Additionally, we had some excellent lobbying from the industry in terms of finding a way for the housing market to be re-opened having implemented new ‘safe moving’ practices. The Government really listened and took time to understand how important the housing market is for jobs and the economy and duly re-opened England in May, followed by the rest of the UK at the end of June.
It didn’t take long once the market had re-opened – perhaps as short as 7-10 days – to see the pent up demand to be released and it’s become very strong in terms of activity month on month since then.
That the market as a whole may also have nearly hit the numbers that were forecast this time last year in a pre-Covid world says a huge amount about how much the industry has achieved in a significantly reduced amount of time and is testament to its resilience on all fronts.
What about the next 12 months?
While SDLT has had a positive impact, one of the most important things to understand about its success or not is whether it has had the desired impact on the wider economy. Of course we won’t be able to measure this emphatically until well into 2021 however we can see new recruitment in this sector, we have seen new spending in other related sectors and of course that implies there is a corresponding multiplier effect that tends to happen when the housing market has more transactions and overall spend. I would expect that this 9 month holiday has definitely generated significant additional spending and at an incredibly important time. Of course, the overall tax receipts equation must work too.
No doubt there is some number crunching going on in government around this and the result will influence any decision on whether to extend the stamp duty holiday or not. Increased housing transactions, higher levels of homeownership and fairness to aspiring FTBs feels like the right set of objectives. That works for the economy but also in the longer term creates the means potentially for there to be less burden upon the state, for things like long term care and possibly pensions.
Separately, demand for the right type of housing remains strong with lockdown continuing to make people think about not just where they live and what they live in, but also who they live with, plus their overall lifestyle in terms of work/life balance. There is good evidence that there is a move away from cities to houses with gardens for example.
I am a bit of an outlier in terms of 2021, in so much as I remain quite positive. There are many reasons to be negative, in fact too many to list. However, as counterbalance, there is also the fact that people’s homes are now being prioritised in terms of their spending, there is a wall of cash built up by those fortunate enough to have carried on working and to have saved money through 2020 – when confidence and some normality returns, this money will be spent, thereby helping job creation and economic growth. I also think there will eventually be a somewhat euphoric feeling upon starting to visibly exit the pandemic malaise, and this should help consumer sentiment, accepting there will be a large swathe of less fortunate people too, which I feel very sad about. The final point and really important point is that 2020 has had good momentum when the market has been open. However, this has been with about half the mortgage products versus 2019 and with much reduced LTVs. As the SDLT related froth dissipates, I expect LTVs to return across the board from the large lenders and through as operational capacity returns, mortgage product availability should also return. This will help to cushion the impact of the end of the various incentives and keep the market moving through 2021.
And beyond that?
I do think right now it’s brave to forecast certainly beyond next year. There is so much we don’t know. But I do think that Government recognises the importance of a healthy and active housing market. I also think it sees clearly that higher levels of homeownership (to my previous point) are probably a good thing. It feels as though housing policy will support our market over the coming years, whereas if I look back, yes, we have seen more landlords snapping up houses, but of course this has led to a large reduction in homeownership. I’d like to see the right landlord continue to play a vital role in helping people to have decent housing to rent, but I would very much like the percentage of homeownership to increase back to over 70% of tenure, as this will be good for the UK economy, good for people’s lives and families and less of a burden upon the state in future decades, something which right now looks more relevant than ever.
