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Extensions to Eviction Bans and Stamp Duty Holidays!

As the pandemic plays out, and lockdown restrictions remain in situ, we're facing a market that is continually hanging in the balance, waiting for updates and announcements.

For many people, the essential news will be about when schools are likely to reopen, or when they might be able to visit friends and family. In the property sector, it's much the same story.

This week, landlords have been informed that the ban on tenant evictions has been extended for a further six weeks.

Alongside that news, rumblings are continuing about a potential Stamp Duty holiday extension, with clarity from the government yet to emerge.

Let's look at each of these extensions, and how they are likely to impact the UK property market, particularly for landlords and property investors!

What Does the Eviction Moratorium Extension Mean in Practise?

So, as of 22nd February 2021, the ban on tenant evictions was due to end. However, last weekend Housing Secretary Robert Jenrick announced that it has now been extended until 31st March.

This extension follows a previous decision to delay the end date from 11th January 2021.

In practice, this news means that:

  • Tenants facing eviction now have an additional six weeks of breathing space. They cannot be evicted before 31st March unless in exceptional circumstances.
  • Landlords struggling with tenants in serious rental arrears can still evict.
  • Bailiffs may not visit a tenant's rented property during the ban, even where the landlord has a possession order.
  • Instances of anti-social behaviour, domestic violence or criminal activity are excluded from the moratorium.

The extension in and of itself makes sense. Tenants won't find themselves evicted during a lockdown or have additional barriers to seeking financial or legal support to avoid being evicted in the first place since many services are closed or extremely limited at the moment.

It's also important to recognise the dangers of evictions during spells of cold weather, which make it more hazardous for people who might find themselves in a precarious situation.

However, the feelings from the sector are mixed.

The National Residential Landlords Association reports that 800,000 private renters are now in rental arrears. Much of this is owing to job losses or a 20% reduction in income for workers on furlough schemes.

Even with an extension, the problem doesn't go away. Landlords may still be severely out of pocket, and facing their own financial struggles. Tenants are unlikely to earn sufficient income to repay several months of rent arrears in the next few weeks - or payback enough of the arrears to avoid being evicted.

Generation Rent is calling for a COVID Rent Debt Fund to support tenants who have lost income due to the pandemic. They also wish for the government to suspend Section 21 no-fault evictions altogether.

As new information is released about any potential schemes to support the private rental sector before, or after the eviction ban is lifted, we'll keep you updated!

Is The Stamp Duty Holiday Extension Likely to Happen?

This week's other big news is the ongoing speculation about a potential extension to the Stamp Duty holiday, currently set to expire on 31st March 2021.

We all know that this scheme has been a considerable driver behind the increased interest in investment properties. It's also been a way for first-time buyers and home movers to secure a new property, even amidst the pandemic, with a saving of up to £15,000 in taxes.

Reports published in The Telegraph in the last few days indicate that the Chancellor is considering another six-week extension, with the new cut-off date falling in mid-May.

However, with nothing yet clarified, it feels like we'll be waiting until 3rd March when the new budget is revealed to hear anything more concrete.

As with the eviction extension, the six weeks feel like a sticking plaster that isn't going to have any substantial impact on the economy's long-term health. It will, though, be very welcome news for some of the thousands of buyers in limbo, hoping against hope that their transactions will complete in time!

Right Move has estimated that around 100,000 buyers had agreed to a property purchase before Christmas 2020 and will not complete it by 31st March.

That said, growth and demand across all sectors remain strong.

  • Sales transactions are up 7% year on year.
  • Enquiries are up by 45%, relating to transactions after the 31st March.
  • Buyer demand continues to outstrip supply and shows little sign of slowing.
  • Average property prices have risen in the last month by 0.5% (£1,522).

Therefore, while this six-week Stamp Duty extension will be fantastic news for some buyers and investors, the property market itself has a robust outlook in the months ahead.

Are Support Scheme Extensions Too Little, Too Late?

The overriding frustration with both of these extensions (or potential extensions!) is that everything is so last minute, it does little to provide sustainable support where it is needed most.

When the eviction moratorium announcement was made, it came just seven days before the previous expiry date of 22nd February. Doubtless, that has been another hurdle for landlords who have tenancy issues, and have with only one week's notice found that they need to weather the storm for a further month and a half.

Likewise, tenants who face financial challenges aren't getting a long-term solution here, but just another extension that doesn't make any material difference to their ability to repay rental arrears, or find alternative accommodation.

The Stamp Duty holiday is likely to be very well received by some buyers who are in the middle of completing a purchase transaction and finding it tough to get their mortgage financing in place.

Still, with enquiry levels soaring, this isn't anticipated to make any quantifiable impact on the volume of house purchase transactions - and will simply make it a little cheaper for those homebuyers who already have an investment underway.

What is clear is that, in this environment of last-minute U-turns and sudden policy changes; brokers, mortgage lenders, buyers, investors and sellers all need to stay on their toes.

As and when new announcements are made, we'll keep you informed!

In the meantime, if you need support with any mortgage financing or bridging lending to tide you over and ensure you fall well within the new Stamp Duty holiday deadline, get in touch with the Revolution Brokers team and we will ensure you are on track.

Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.

 

Author

Almas Uddin

FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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