Mike Richards, director and mortgage adviser at London-based Mortgage Concepts Associates, believes the aforementioned tax rules will lead to more and more residential homeowners abandoning their plans to move.
Mr Richards says: “I think we may go back to ‘don’t move, but improve’ your house again.”
Highlighting the importance of mobility in the overall housing market, Mohammad Jamei, senior economist at CML, says: “There are a few issues affecting [home movers], and one of them is transaction fees. Stamp duty is a big upfront fee that homemovers and first-time buyers have to pay. In a lot of cases, if you’re wanting to trade up to a slightly bigger property, transaction fees like stamp duty don’t make it worthwhile.
“So then you end up building an extension or making home improvements instead. And that really causes some friction in the market, especially when it comes to labour mobility”.
Mr Jamei says the government should look again at this part of the market, suggesting that greasing the wheels will be of assistance to all parties. Table 1 shows the role that home movers have played in the mortgage market over the past decade.
“Home movers have received next to no help from the government. This part of the market, especially over the last three years, hasn’t moved in activity levels at all, whereas you’ve seen first-time buyers recover quite strongly.
“I think if there’s any part of the market that requires some attention, it’s home movers and trying to help them make the next step up to free up housing.”
Bank of Mum and Dad
While ultra-low mortgage rates, slowing price growth and government initiatives such as the Lifetime Isa have given a helping hand to first-time buyers, buying patterns in this section of the market remain intact.
Research from the Social Mobility Commission shows that 34 per cent of first-time buyers – up from 20 per cent in 2010 – are heavily reliant on financial help from family members when trying to purchase a home. And for those who do have backing, a lack of supply is still proving to be an issue in areas outside of London.
Daniel Bailey, mortgage broker at Derbyshire-based Middleton Finance, says: “I’ve got a lot of frustrated first-time buyers at the moment. Clients have mortgages agreed, but because there’s such a lack of property on the market, they’re putting in offers and just not being successful.”
Ray Boulger, senior technical manager at John Charcol, suggests that the government may have missed a trick where potential new-build property owners are concerned.
