The UK housing market requires long-term stimulus to bring it fully to life and avoid short term peaks and troughs, according to Robert Burdett, managing director of James Leigh Property Management.
The company said in a recent statement that the market had been handed a lifeline with the stamp duty holiday, triggering activity across the UK as buyers look to take advantage of potential tax savings.
However, with sales slowing in March as the holiday neared its anticipated end followed by an upsurge in sales and enquiries when the extension was announced by Chancellor Rishi Sunak, Burdett believes that the prospects of long term stability aren’t supported by these short term measures.
He 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.”
One of the key issues raised by the firm was that some buyers are prevented from accessing mortgage finance, as their income prevents them from meeting the lender’s criteria - even if their current rent payments are more than a mortgage would cost them. Meanwhile, uncertainty about the future of the market looms while people continue to look to move outside of the major cities.
To support the market in the longer term, James Leigh’s suggestions include a continuation of the Help to Buy scheme and reforms to the mortgage industry to ensure affordability criteria is more in line with household expenditure, and that rents could be used as a benchmark when assessing affordability.
In addition, it suggested that reducing other expenses such as stamp duty could raise more revenue for the Exchequer in the long run if it helps to level out the 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 term measures whilst useful at the time, do nothing for longer term stability and growth.”