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Property transactions down 12% as market ‘normalises’

Residential property transactions were down 12 per cent between October and December, but experts say the dip was simply a sign of the housing market returning to normal.

HM Revenue & Customs data published last week (February 4) also showed property transactions incurring stamp duty land tax – those worth £125,000 or more – were 10 per cent lower than in the previous quarter.

Both dips were preceded by four quarters of growth following the stamp duty holiday which began in July 2020. October marked the first month back to normal stamp duty land tax brackets, having been adjusted during the pandemic to prop up the housing market.

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Home buyers had been able to avoid the tax on properties priced at up £500,000 until June, before the price brand for tax exemption returned to £125,000 in October.

Conor Murphy, chief executive of Smartr365, said the decrease in transactions was “certainly no cause for concern”.

He continued: “The market is fundamentally in a sound place – underpinned by low mortgage rates and high mortgage availability – demand remains overwhelmingly positive.

“While there have been a couple of artificial spikes over the past two years influenced by external stimuli, which we expect to pass, the gradual readjustment to ‘normal’ activity should not be seen as a sign of an unhealthy market, but rather a natural process.”

Murphy said advisers’ focus this year should be on helping clients navigate the headwinds of rising living costs and inflation, suggesting many clients will need more guidance than usual to help them through the house buying process.

Despite property transaction volumes dipping, the government still made more money off stamp duty land tax than the previous quarter, due to the fact far more properties were paying the tax again.

Receipts increased 19 per cent from October to December compared to the previous quarter, finishing on £2.95mn.

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Back in April, the government also introduced a 2 per cent surcharge on the purchase of residential properties by non-residents. Up to the end of Q4 2021, HMRC said this had resulted in 8,500 transactions paying £86mn in tax.

“With many central London properties laying empty as a result of overseas buyers purchasing prime real estate as an investment, the tax was introduced to try and make it a fairer market for Londoners often priced out,” Karen Noye, a mortgage expert, explained.

Research published yesterday (January 7) by Butterfield’s mortgage operations in the UK found 70 per cent of 1,100 homebuyers it surveyed wanted to see overseas buyers pay an even higher stamp duty land tax rate than the current 2 per cent.

This was as another majority of those surveyed, 58 per cent, said stamp duty is an “outdated tax” in need of a reform.

“Clearly in its first full year in force there remains interest in property from overseas buyers even despite the global pandemic and the restrictions on travel,” said Noye.

“With the UK being one of the first countries to emerge from the pandemic London property may soon become attractive again if overseas buyers can stomach the additional tax. However, with house prices remaining very high it may be one step too far for this type of investor for the time being.”

Noye agreed with Murphy that the dips in stamp duty and residential transactions painted a picture of a housing market that is “slowly getting back to some sort of normality”.

She added: “With interest rates on the rise and a cost of living crisis looming it’s likely that some of the wind is coming out of the housing market’s sails and prices may start to deflate after intense double-digit growth.”

Last week (February 3), the Bank of England raised the UK’s base interest rate to 0.5 per cent, the second increase since September.

By Ruby Hinchliffe

Source: FT Adviser

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Stamp duty holiday has triggered 22% spike in transactions

The stamp duty holiday has triggered a 22% rise in monthly property transactions, equivalent to more than 171,000 extra sales, according to Search Acumen.

The current tax holiday triggered a 7% rise in house prices between June 2020 and February 2021, adding £17,265 to the price of the average home in England.

This rise has more than offset the £2,572 savings made on the average property.

An average of 103,724 residential property transactions have occurred each month across England and Northern Ireland since the tax break was first introduced in 2020, up 22% from the 84,691 average in the 12 months to March 2020, before the first lockdown stalled the market.

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Since the measure was introduced, 171,303 extra deals have taken place compared to the pre-COVID period in 2019/20.

Search Acumen’s analysis shows the stamp duty holiday of 2008/09 in the wake of the financial crisis saw an average of 60,048 transactions per month.

This was down 27% from the previous 12-month average of 82,378 monthly residential property transactions.

Higher transaction volumes during the current holiday could be partly attributed to lending conditions being more favourable than in the aftermath of the financial crisis.

Strong credit availability has helped property transactions progress despite pandemic-induced disruption to the economy, with the tightening of credit mainly concentrated in the high loan-to-value (LTV) segment of the mortgage market.

Prospective buyers have been able to access relatively cheap medium and low LTV mortgages to finance home purchases during the current stamp duty holiday.

In contrast, homebuyers suffered from lenders pulling back from the mortgage market during the Credit Crunch in 2008/09.

The impact on average property prices during the two stamp duty holidays has also differed significantly.

Since the current holiday was introduced, house prices in England have jumped 7% to £268,291 from £251,026.

For comparison, the stamp duty holiday of 2008/09 saw house prices in England fall 2% to £174,136 in December 2009 from £177,232 in August 2008.

Andy Sommerville, director at Search Acumen, said: “This analysis suggests the property market has been far more responsive to intervention compared to the post-financial crisis holiday.

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“The housing market’s strong performance compared to the wider economy highlights the contrast between the current healthcare crisis and its economic impacts, and the 2008/09 crisis which was rooted in financial markets.

“While many households have absorbed income hits and face greater job insecurity, the UK’s financial system has held up reasonably well since the onset of COVID.

“Lenders did pull back from the mortgage market in the early stages of the pandemic, but the flow of credit has gradually picked up as banks got to grips with the crisis.

“As a result, financing for house purchases has been in reasonably good supply and worked in tandem with the stamp duty holiday to generate a level of activity not seen for a decade, despite the unprecedented challenges of COVID-19.

“However, giving extra support for buyers has had many challenging consequences, from pushing up house prices and negating the average saving to heaping a heavy workload on time-pressured conveyancers.

“Property lawyers have been working around the clock to get people into their homes before the initial 31 March cut off.

“The conveyancing workload is unlikely to get any lighter given the holiday is now running until June and tapering through to September.

“In the long term, the industry needs to put conveyancing capacity – not to mention mental wellbeing – at the top of the agenda given the pressure law firms have been under to ensure clients complete on time.

“It is clear the traditional way of performing due diligence on transactions is getting in the way of efficiency, and we need to pivot quickly to digital, data-led solutions that can improve the experience for homebuyers and their advisers.”

By Jake Carter

Source: Mortgage Introducer

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Stamp Duty Land Tax transactions in Q1 up 48% annually

The total number of Stamp Duty Land Tax (SDLT) transactions in Q1 2021 was up 48% annually, according to HMRC data.

On a quarterly basis, the number of transactions was up 1%.

The increase in transactions in the last three quarters has likely been impacted by the introduction of the SDLT holiday for residential properties, helping offset the decrease caused by COVID-19.

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Residential property transactions in Q1 2021 were 2% higher than in Q4 2020, and 53% higher than in Q1 2020.

Non-residential property transactions in Q1 2021 were 7% lower than in Q4 2020, and 6% higher than in Q1 2020.

Total SDLT receipts in Q1 2021 were 8% lower than in Q4 2020 and total SDLT receipts in Q1 2021 were similar, up 1%, to those in Q1 2020.

The change in receipts has mainly been caused by the introduction of the SDLT holiday.

Residential property receipts in Q1 2021 were similar, within 1%, to both Q4 2020 and Q1 2020.

Non-residential property receipts in Q1 2021 were 24% lower than in Q4 2020, but 4% higher than in Q1 2020.

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Up to Q2 2020 there were 540,900 claims that have benefited from the relief, and the total amount relieved by these claims is £1,294m over the period.

An estimated total of 65,300 transactions were liable to HRAD in Q1 2021, with the 3% element generating £285m in receipts, an decrease of 16% from the previous quarter, and a fall of 15% compared to Q1 2020.

The percentage of residential receipts from HRAD transactions has dropped slightly by 3% to 46% when compared to both Q3 2020 and Q4 2020.

Vikki Jefferies, proposition director at PRIMIS Mortgage Network, said: “Today’s figures show a clear increase in Stamp Duty Land Tax transactions over the first quarter, underscoring the fact that the mortgage industry is continuing to recover from the impact of the COVID-19 crisis.

“There is no doubt that the Chancellor’s decision to extend the stamp duty tax break in his Budget announcement helped to fuel this activity by stimulating buyer appetite and boosting demand.

“As we approach the tapered extension of the stamp duty holiday, the priority for the mortgage market will be processing cases quickly and efficiently so that borrowers are able to benefit from the tax cut.

“In order to achieve this, key players in the market, including lenders, advisers, distributors, housebuilders, surveyors and conveyancers should work collaboratively to ensure that clients are best supported during this period and that the application process is as smooth as possible for all involved.’’

Cloe Atkinson, managing director at Mortgage Engine, added: “Today’s figures show once again just how frenzied activity in the housing market is.

“The release of pent-up demand for property has been super-charged by the stamp duty holiday extension.

“The tax holiday has certainly been a success by any metric and current activity levels are further proof of the resilience of brokers, lenders and borrowers alike.

“Over the last year, the virus has forced the industry to re-shape the way consumers buy property and led to a great deal of adaption and innovation to overcome the difficult conditions caused by the pandemic.

“Technology has been important for all parties in transitioning to this new way of completing purchases and the industry has seen a large increase in the use of tech solutions, such as remote viewings and automated valuation models.

“As the UK looks forward to the return of some pre-pandemic normality, tech-driven solutions will continue to be a vital part of the success of the mortgage market.

“A lot of progress has been achieved in the last year when it comes to tech adoption, but the industry needs to be ambitious and continue to build upon this momentum to provide better outcomes for its consumers.”

By Jake Carter

Source: Mortgage Introducer

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Property transactions have jumped 27% in one month

The number of property transactions registered in England and Wales jumped 27% between November and December 2020, the Conveyancing Market Tracker from Search Acumen found.

The final month of 2020 saw 73,142 completed property transactions logged by conveyancing firms, up from 57,632 in November 2020.

The number of active conveyancing firms has recovered from a low during the first pandemic-induced lockdown, increasing by 58% to 3,808 in Q4 from a low of 2,411 in Q2 2020.

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Andy Sommerville, director at Search Acumen, said: “This latest data reveals how much more resilient the property market has been to pandemic-induced shocks compared to the wider economy.

“The surge in activity in the property market can be largely attributed to buyers rushing to capture the savings on offer through the higher stamp duty threshold.

“Demand has also been stimulated by a change in consumer appetite for properties outside of cities with access to green spaces, as more people than ever before are working from home.”

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He added: “The stamp duty deadline has put enormous pressure on the conveyancing industry and the traditional processes underpinning much of it, not to mention putting lawyers’ stress levels and patience to the test.

“This capacity crunch is set to escalate over the next few months and stretch the limits of existing working practices. The conveyancing market is crying out for innovation to better respond to consumer demand.”


Source: Property Wire

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Number of residential transactions up by 8.1%

The provisional seasonally adjusted estimate of UK residential transactions in October 2020 was 105,630, 8.1% higher than October 2019, according to data from the HMRC.

On a monthly basis, the number of UK residential transactions saw a 9.8% uplift.

Looking to non-residential transactions in October 2020, this figure stood at 9,140, which was 5.1% higher year-on-year, and up 6.2% on September 2020.

In addition, on a non-seasonally adjusted basis, there were 121,740 residential transactions in October 2020 which is a year-on-year increase of 13.7% and 23.7% higher than in September 2020.

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There were 9,840 non-residential transactions in October 2020, non-seasonally adjusted, which was down 6.1% on October 2019 however, up 12.8% month-on-month.

Sam Mitchell, chief executive of Strike, said: “October was another busy month for the housing market, with transactions still rising despite the tougher lockdown restrictions.

“The government’s stamp duty holiday has created such a strong pipeline of activity that we believe this pattern could continue right up until the end of March.

“It’s shaping up to be a phenomenal end to the year for the UK property market.

“News of a vaccine has boosted confidence, and people are still rushing to benefit from the stamp duty holiday incentive – both contributing to us having a record-breaking day for offers just last Monday.

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“Regardless, we don’t expect any change in the rising number of people looking to move in light of changing circumstances, with the lockdown baby boom and flexible working being two of the many reasons we’ve had more sellers than ever knocking at our door.”

Nigel Purves, chief executive of Wayhome, added: “The HMRC has reported a continued rise in the number of transactions in the residential property market, likely as buyers rush to complete before the stamp duty cut ends in March.

“The property boom is so far showing no signs of slowing down, and there is a risk of a two-track market emerging, where those who can afford to buy are accounting for the increase in property transactions and the reluctant renters and first time buyers are left behind.

“It’s time we address how to even the playing field when it comes to homeownership.”

Paul Stockwell, chief commercial officer at Gatehouse Bank, said: “The pent-up energy buyers have brought to the housing market since the end of the first national lockdown hasn’t abated and transaction volumes continue to climb.

“Deal levels have recovered from the April slump and are now higher than last year’s figures and, with data from the Bank of England showing mortgage approvals in September represented the highest levels of agreed borrowing since before the Global Financial Crisis, this trend looks likely to continue over the coming months.

“However, with the stamp duty discount deadline looming in March, sellers and buyers alike will feel the pressure to get the deal over-the-line as soon as possible, heaping pressure on the property industry as we close out the year.”

By Jake Carter

Source: Mortgage Introducer

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Property Transactions Are Back To Pre-Covid Levels

There were just over 98,000 residential property transactions in September, 0.7 per cent lower than in September 2019 but 20.3 per cent higher than in August this year.

The figures come from the Inland Revenue which logs monthly property transactions completed in the UK with value of £40,000 or above for Stamp Duty Land Tax purposes.

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‘Provisional residential transactions estimates in September 2020 have noticeably increased compared to August 2020, likely due to the continued release of pent-up demand within the property market since March 2020 and early impacts from the temporarily increased nil rate band of SDLT’, said the Revenue.

Residential transactions decreased significantly in April 2020, reflecting the impact of the Coronavirus and public health measures taken in response.

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Between 2005 and 2020, monthly transactions have varied between 160,000 (the height hit in 2006) and a low of 40,000 in August this year. At close to 100,000, the number of transactions is back up to levels seen consistently since 2013.

The nil rate band for residential SDLT was increased to £500,000 from 8 July 2020 to 31 March 2021 for transactions in England and Northern Ireland.

Source: Residential Landlord

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Pent up demand sees residential transactions increase in July

The provisional seasonally adjusted estimate of UK residential property transactions in July 2020 was 70,710, 14.5% higher than June 2020, likely due to pent up demand following lockdown, according to the HMRC UK Property Transaction Statistics.

However, this was 27.4% lower than July 2019.

The seasonally adjusted estimate of UK non-residential property transactions in July 2020 was 8,380, 18.3% low er than July 2019, but 27.6% higher than June 2020.

The non-seasonally adjusted estimate of residential property transactions was 80,490, 23.2% lower than one year previous.

The non-seasonally adjusted estimate of non-residential property transactions in July 2020 was 8,770, 16.6% lower than July 2019.

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The Q2 2020 residential transactions count is the lowest quarterly total within the period of April 2005 to April 2020, reflecting the impacts of coronavirus.

Mark Harris, chief executive of SPF Private Clients, said: “While it’s still too early for the stamp duty holiday to feed through to HMRC’s July numbers, transactions continued to pick up owing to pent-up demand.

“Of much more interest will be September’s data when the full impact of the stamp duty exemption will be felt and the bustle of activity that we are seeing will feed through to the official numbers.

“Lenders remain keen to lend although they are exceptionally busy due to higher demand, dealing with the summer holidays and other demands placed on them by the fallout from the pandemic, with closer scrutiny of borrowers’ incomes meaning everything is taking longer.

“Rates are still competitively priced although at higher loan-to-values in particular they are creeping up.”

Anna Clare Harper, author of Strategic Property Investing, said: “The upward trend in transactions data reflects a piece of positive news for all of us: the housing market is moving again after a complex start to the year.

“This change reflects a release of pent-up demand and supply.

“What we’re seeing in the market, which will be reflected in August and September’s data, is the further influence of recent and temporary policies.

“The temporary Stamp Duty Land Tax change is helping those home buyers and investors who are looking to buy a property worth less than £500,000 in particular.

“We don’t know for sure what will happen next: economically, or in policy. But what we can predict accurately is that two crucial factors – economic confidence and policy – will prove fundamental to the future of the UK housing market.”

Alan Cleary, managing director, mortgages at OneSavings Bank, said: “It’s no surprise that market activity is down on 2019 transactions, but it’s encouraging to see a significant uptick since the easing of lockdown.

“With the market experiencing its busiest month for enquiries in more than 10 years in July, according to Rightmove, as a result of pent up demand and the government stimulus on stamp duty we should see an improvement in transaction levels in months to come.

“First time buyers, homeowners and landlords wishing to take advantage of the stamp duty relaxation should move sooner rather than later to ensure they don’t miss the deadline.”

By Jessica Bird

Source: Mortgage Introducer

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Residential property transactions jump 32% in June – HMRC

Residential property transactions in June increased 32% month-on-month to 63,250 transactions, HMRC figures show.

However, this is still far below the transaction levels seen in the same month last year. Year on year, transactions were 36% lower than June 2019.

Non-residential transactions rose 31% to 7,340 in June but annually, this was represented a 27% decline on the same month last year.

Market position to be seen in months

Andrew Southern, chairman of Southern Grove, said: “The annual decline isn’t particularly flattering but it’s the trajectory that’s most important. The next few months are going to make June look like an amuse-bouche rather than an entrée.

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“A healthy improvement in volumes month-on-month points to a large proportion of agreed sales that were knocked back, due to the pandemic, finally reaching completion.”

Paul Stockwell, chief commercial officer at Gatehouse Bank, added: “Whilst the transactions figures have not improved significantly since May, the nature of the property market means people have not had enough time to get through the moving process.

“It will take a bit longer for us to see how much new activity there has been in the market since it reopened in May.”

Stamp duty concerns

Mike Scott, chief property analyst at Yopa, said the recent stamp duty holiday in England and Northern Ireland, as well as similar initiatives in Scotland and Wales would help bring some transactions forward to this year but suggested this would not have a lasting impact.

“After a spike in the number of completions in March 2021 there will probably be another fall in the second quarter of next year as the normal rate of stamp duty is reimposed,” he said.

Tomer Aboody, director of MT Finance, also agreed the tax break had a positive effect on the market but said changes to capital gains tax could set that back.

Aboody said: “If the government increases capital gains tax on principal home sales, it will push us back again so any progress made by the stamp duty reduction will be swiftly lost.

“We need more stimulus via reduced stamp duty to the upper end of the market and hope for this in the Autumn Budget.”

Written by: Shekina Tuahene

Source: Your Money

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Property transactions remain stagnant

The number of residential property transactions in the UK in December decreased on a monthly basis but it experienced a mild increase year-on-year, official data has shown.

The provisional UK property transaction count for December 2018, for properties above £40,000, was 102,330, according to the latest report from HM Revenue and Customs.

This meant transactions were down 0.1 per cent on November but they were up 3.6 per cent when compared with December 2017, when it was 98,760 transactions.

Kevin Roberts, director at Legal & General Mortgage Club, said: “The mortgage market is offering more choice and flexibility than ever before; however, transaction levels continue to tell the same story of stagnation.

“Political uncertainty, the cost of moving and barriers such as stamp duty are leading some homeowners to ‘improve, not move.’

“The government’s extension of the Help to Buy scheme and a stamp duty exemption to shared ownership properties will help those further down the ladder, yet there is more work to be done.

“Extending this break to last-time buyers would free up larger properties for growing families, enabling the next generation of homebuyers to step onto or even up the property ladder.”

Data released last week showed first-time buyers and remortgages continued to drive the UK housing market towards the end of 2018, as homeowners benefitted from competitive deals and housing schemes.

More than 35,000 new first-time buyer mortgages completed in November 2018, up 5.8 per cent when compared with the same month in 2017 and at a value of £6bn, according to UK Finance’s November Trends update.

But UK Finance also found the buy-to-let market had seen 9 per cent fewer new home purchase mortgages in November 2018 than it did a year earlier, while remortgages in this sector increased by 9.5 per cent.

The Help to Buy scheme was launched in 2013 and is available for new build properties, offering a government loan of up to 20 per cent of the home’s value.

In the October budget Chancellor Philip Hammond confirmed the Help to Buy Equity Loan scheme would be extended until 2023 from its previous 2021 deadline.

The HMRC data meanwhile showed the number of non-residential property transactions increased by 5.5 per cent between November 2018 and December 2018.

This figure was 5.4 per cent higher than in the same month last year.

Source: FT Adviser

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Property transactions down in September

There were 98,400 residential property transactions in September, down 0.5% from August and 2.7% year-on-year, HMRC property statistics showed.

Similarly the seasonally adjusted estimate showed 9,450 non-residential property transactions in August, decreasing by 6.7% from September and 7.3% lower than that last year.

Steve Seal, director of sales and marketing, Bluestone Mortgages, said: “Again, it’s the same story as last month, and the month before. Seasonal activity continues to remain flat, with rising living costs and house prices discouraging many aspiring homeowners from entering the property market.

“We mustn’t also forget the added burden of saving enough money on the side to cover a mortgage deposit.

“Building more affordable housing isn’t new news. However, it’s not just a question of building more ‘one size fits all’ housing, but building stock across all the different stages of the housing cycle.

“Demand may outweigh supply in London, for example, but in other parts of the UK, supply outweighs demand due to a lack of appropriate housing stock for aspiring families or those looking to downsize.

“With a week until the Autumn Budget, it is vital that the industry and government work together to address these issues and commit to a long-term genuine plan.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Transactions will always be a much better test of property market health than prices.

“These numbers show the patient to be in reasonable condition but still fairly weak so vulnerable to any unpleasant Budget medicine which may stall their recovery.

“On the ground, some buyers and sellers are cautiously coming to the market but in nowhere near the numbers hoped for or expected. As a result, sentiment is not strong and only those prepared to negotiate hard are successful.

“The content of the Budget, one way or the other, will make a difference to property market prospects for the rest of this year, as will the conclusion of the Brexit negotiations.”

Andy Sommerville, director at Search Acumen, illustrated that property transactions took a dip at the end of the summer as the property market cooled down in September, and also highlighted the significance of the upcoming Budget on 29 October.

He said: “Property transactions took a dip at the end of the summer as the property market cooled down in September. After a strong August, activity in UK housing has sunk back down to earth.

“Overall however, transaction figures prove that talk of a housing market crash at the hands of Brexit uncertainty is seemingly overdone.

“While London continues to suffer from a significant property market freeze, the housing market outside the capital continues to be active. People are ignoring the lack of clarity from the government and are instead pressing ahead with the business of buying and selling homes.

“Looking ahead to next week’s Budget, it would be surprising if the Chancellor didn’t continue his support for first-time buyers who have been a major engine that’s helped keep the UK’s housing market moving through 2018.

“The entire property sector is hoping for a helping hand to keep what momentum we do have going into 2019.”

Source: Mortgage Introducer