After lockdowns devastated UK real estate sector, could Covid clauses protect homebuyers and sellers?

After months of playing down the prospect of an extension to the stamp tax holiday for property sales of up to £500,000, UK Chancellor Rishi Sunak ultimately opted for a bold new set of stimulus measures for the British housing sector in the 2021 budget unveiled earlier this month. In addition to a three month extension to the stamp tax holiday, originally meant to expire 31 March but now running until the end of June, followed by an additional three months of exemptions on some sales to ensure a “smooth transition back to normal,” the Chancellor is now also rolling out a mortgage guarantee for home loans at 5% deposit.

Survey findings from the Royal Institution of Chartered Surveyors (RICS) suggest the measures come not a moment too soon. Though the housing sector showed strong numbers after lockdown measures were lifted last May, pushing the market to a six-year high, UK lenders all but ensured the recovery would not last by restricting access to mortgages. Coming out of the first lockdown, British banks reduced fixed-rate two and five-year mortgage deals at 95% Loan to Value (LTV) down from 105 to just 15 – with record high repayment fees attached.

As such, after a rush of real estate activity followed the first two months of lockdown and prompted predictions of a real estate recovery in the second half of last year, a dropoff over the first two months of 2021 demonstrated the need for realistic expectations in a pandemic-era economy. RICS found a 29% drop in buyer enquiries in January and a further (if more moderate) 9% decline in February, with surveyors seeing fewer properties going on the market. In sharp contrast to last year’s post-lockdown optimism, many housing market analysts predicted a bearish 2021 before Sunak’s latest announcements – even as real estate agents like Savills reacted to the new budget with fresh predictions of booming prices to come.

By Colin Stevens, please read the full article on eureporter.co.

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