What are the pros of bringing HTB2 forward?
From an industry perspective, it’s great news. A traditionally quiet period from November to mid January is now likely to be much busier. That’s good news for agents, legal companies, surveyors, lenders and removal chaps. More business for these companies means more jobs, so good for the economy.
| From a general public perspective, the introduction of the scheme early is good news. Normally you can get better deals on properties on the market up until Xmas and there are still some great lender deals too thanks to the Funding for Lending Scheme. Finally, if confidence really increases, hopefully sellers will look to put their properties on the market and trade up or down to another property. This would increase choice for buyers, reduce the pressure on prices and the extra transactions would boost the economy. |
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What are the cons of bringing HTB2 forward?
It’s a little more difficult to predict the downsides of bringing it forward than it is the upside as there are so many unknowns.
Potentially, opening up the scheme to all homes could dent the huge increases in sales we’ve seen to date from developers. If this happens, it’ll cause problems for developers and they may put the brakes on building more homes.
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XXX | Secondly, lending this side of Xmas for H2B may be very limited and no-one can actually complete their purchase prior to 2nd January 2014. Lenders at the moment are having to deal with a huge amount of new regulation around mortgages. In addition the lenders haven’t had the details of the scheme yet. They don’t know the cost and capital implications of the scheme apart from their own calculations, so it’s a bit of a shot in the dark to offer the scheme to people without this information. |
As such, it may be the scheme is brought forward, but without the detail being clear, lending on the scheme may well be very limited until too late in the year to make much of a difference.
Thirdly, there are already rumours that the market isn’t geared up to more transactions. Stories of taking a month to get a surveyor out and delays at legal companies due to lack of staff are rife. And one of the worst affected areas is Local Authority Searches, some of whom are taking six weeks or more to get the information to legal companies to progress a sale or purchase.
Finally, it could just drive demand further and more supply may not come forward. In this case, all that will happen is some areas prices will be squeezed upwards, whereas in others it just makes no difference at all to transactions and prices remain the same.
Whatever happens, we aren’t likely to see the impact for a few weeks yet, so it’ll be end of October through to November to see if HTB2 will successfully increase transactions and boost the economy without causing unnatural house price increases.
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