During the first national lockdown, no one knew what was in store for the housing sector. However, following the reopening of the property market in May, demand reached new heights. Buyers and sellers across the UK pressed ahead with their homeownership plans, leading to an 8.5 per cent increase in average house prices in 2020, according to the Office for National Statistics — the highest annual growth recorded since 2014.

Government support for buyers has played a big part in encouraging demand for homes since the start of the crisis and it is likely to continue to do so in 2021. While many were already looking to move into new properties with suitable home-working spaces and outdoor areas, the stamp duty holiday and the prospect of saving thousands in tax were undoubtedly drivers of a significant number of transactions and will continue to be until later this year.

An extension, followed by a tapering of this holiday, as well as the launch of a government Mortgage Guarantee Scheme, were both welcome items in the chancellor’s budget and are likely to further support consumer appetite to purchase.

Extended deadline

Those looking to benefit from the stamp duty holiday extension will need to move quickly to avoid disappointment. Buyers in England and Northern Ireland have until 30 June to complete while the nil-rate band is set at £500,000. It then falls to £250,000 before reverting to its normal level (£125,000) on 1 October.

Buyers in Wales also have until 30 June to purchase a property while the nil-rate band is set at £250,000; it then returns to its usual level of £180,000.

Legal & General Mortgage Club’s research has found that, since the market reopened last year, delays to the homebuying process have meant it is taking as long as 17 weeks for some to complete a purchase.

Independent mortgage advisers have a key role here because they will be best placed to support borrowers in meeting the new deadline. They can help to avoid unnecessary delays by ensuring applications are packaged correctly and customers are still accessing the best deals available.

Demand for new-build homes will also continue to be driven by the government’s Help to Buy scheme in 2021, although the transition to the second stage of HTB will be completed this year. This means only first-time buyers can use it and properties must meet the new regional price caps. Applications under the previous version closed on 15 December 2020 and anyone mid-way through a purchase must now meet the legal completion deadline of 31 May.

The government’s First Homes scheme is also expected to launch later this year, further helping to support demand for new-build homes. The scheme would offer a 30 per cent discount on the price of homes purchased by people wishing to remain in the community in which they currently live or work. The government is looking to prioritise first-time buyers, military veterans and key workers.

While existing homeowners can no longer use Help to Buy, the Mortgage Guarantee Scheme will help to unlock demand by providing a useful alternative for low-deposit buyers.

The UK’s five largest mortgage lenders will return to the 95 per cent lending market from April. Meanwhile, Accord Mortgages, Aldermore, Bank of Ireland, Skipton Building Society and TSB have recently launched 95 per cent LTV products independent of the government’s scheme.

Any activity at the high-LTV end of the market will naturally help younger borrowers and those with smaller deposits, further supporting more people onto, and potentially up, the housing ladder.

Improving supply

Maintaining a healthy housing market is central to the UK’s economic recovery from the coronavirus crisis, so we should welcome the bumper demand seen over the past year and hope for a continuation of the trend in 2021.

We also need to consider how to manage this demand by improving housing supply. The government has suggested on numerous occasions that the crisis has presented an opportunity to ‘Build back better’. As part of this, we need to create more homes to keep property prices under control and avoid further stretching affordability for buyers.

Little has been said about this in recent months. But it is essential that the government delivers on its promise to develop a long-term housing strategy and increase supply with 300,000 extra homes each year.

Craig Hall is head of broker relationships and propositions at Legal & General Mortgage Club