A solicitor at a leading City law firm has said that buyers adopting a “wait and see approach”, spurred by political and economic uncertainty, contributed to a fall in trade-up home purchases in 2016, which has generally been attributed to a lack of suitable housing stock.
Ed Zneimer, a solicitor at Carter Lemon Camerons LLP, was speaking after research published by Lloyds Bank found that four per cent fewer people moved home in 2016 than in 2015. This was the first time that prices had fallen since 2011 and comes despite record low interest rates and pay growth.
Ed said: “I think that there is perception that moving home, particularly for those families at the mid-range of the housing market has become ever more expensive.
“Whilst the cost of borrowing remains at a record low, the highly public changes to the stamp duty land tax (SDLT) regime over recent years mean that almost anyone trading up faces a considerably higher SDLT bill to pay. The three per cent second home surcharge rules won’t affect everyone but they will affect quite a few families with rental properties or holiday homes. I think the impact has been wider-reaching and people have just assumed that SDLT has become prohibitive – that’s how perception can become reality.
“Whilst it is tempting to throw Brexit and the US presidential election into the mix just for the sake of it, I think it is undeniable that 2016 was a year of unprecedented political and economic uncertainty and during such times it is human instinct to stay put and adopt a wait and see approach when it comes to major family life decisions – like upping sticks and moving home.”
However, he suggested that the availability of options other than moving home will also have impacted the statistics.
He said: “Rather than trading up, many are choosing to build up, or down, or out – extending the current family home and getting the most out of an existing plot has become an increasingly popular solution for families looking for more space”
“Many homeowners, certainly where I live in the London Borough of Barnet, have taken advantage of the current permitted development rules, which basically allow them to extend their current homes without the need for planning permission. For example, whilst a neighbour may object and will routinely be consulted by the council in question, it is currently possible to build a single storey rear extension of eight metres on a detached house until 30 May 2019.
“Savvy homeowners are taking advantage of this, saving money through not having to pay any SDLT at all, or much in terms of legal and other fees, and taking further advantage of the low interest rates available by financing their extension through borrowing further against their existing property.”