Long-term stimulus is needed to bring the housing market fully to life, and avoid short term peaks and troughs, according to James Leigh Property Management MD Robert Burdett.
In a statement, the company said that the Stamp Duty holiday has been a lifeline for the housing market, stimulating house sales across the UK thanks to the savings that could be made on this sales tax.
However, with sales slowing in March as it neared its anticipated end and an upsurge in sales and enquiries when the extension was announced by Chancellor Rishi Sunak, the firm said that short term measures such as this do not encourage long term stability.
Burdett said: “The Stamp Duty holiday is an unprecedented and very welcome shot in the arm for the housing market when it was desperately needed. But with lockdown now easing and Covid-19 firmly in retreat, now is the perfect opportunity to be looking at how the housing market can be built on firmer foundations than it has previously enjoyed. The introduction of the 95% mortgage is a welcome move for first-time buyers, but more needs to be done to ensure the whole market can enjoy a stable future.”
Among the issues raised by the firm was that lending criteria currently prevents some buyers from accessing mortgage finance because their income is not high enough to meet the lender’s criteria, even if they were paying more in rent than they would for a mortgage. The trend of people continuing to work from home and choosing to live out of the major cities also led to uncertainty about the future of housing market.
The company suggested that support for the housing market for the long term could include a continuation of the Help to Buy scheme and reform to the mortgage industry so that affordability reflects current household expenditure. Rents, it said, could be considered as a benchmark for people moving from rented to mortgaged property for example. In addition, it posited that reducing cost burdens like Stamp Duty in the long term could raise more revenue for the Exchequer if it ensures a more level market.
Burdett added: “In the end, the housing market needs measures in place that will flatten the bumps in the road and create a sustainable future market. If the Stamp Duty Holiday has taught us anything, it’s that short terms measures whilst useful at the time, do nothing for longer-term stability and growth.”
This post has originally been featured in Property Wire.