When the Stamp Duty Land Tax holiday was introduced in July 2020, it immediately stimulated the housing market. At Pepper Money, we saw a shift to increased purchase business over remortgages; a strong indicator that the SDLT holiday had a significant impact on customers’ behaviour.

Fast forward to June 2021 –  the last month of the full holiday operating within the property market – and Mortgage Solutions reported a year-on-year increase of housing sales of 220%. However, the speed of success is slowing as the Stamp Duty Holiday is now coming to an end. Nil-rate thresholds are reduced to £250,000 until 30 September, after which they return to the normal level of £125,000.

We’ve read plenty of opinions and perspectives that have been published from all parties involved: government officials, estate agents, and housing developers.

I believe it will mean business as usual for specialist lenders as we’re witnessing an increased, steady demand from customers; despite the fall-out and impact which affected many during the pandemic.

“Post-SDLT and post-lockdown, we see a greater need for specialist lending brought on by changing circumstances and diversified income streams”

Purchase business will stay strong

As a result of the pandemic, many people across the UK continue to re-evaluate their living arrangements to search out properties that fit their changing circumstances better.

There are two reasons for this:

  1. With remote and flexible working being adopted by millions (our team included), many people are realising that they no longer necessarily need to live near their office.
  2. The time in lockdown before the market really kicked into life again was a period of reflection for many of us. Countless people who were perhaps on the fence with their next move have made the commitment that only the unprecedented circumstances from the last year could have brought. But many more will be still putting their plans in place.

This is where the Stamp Duty holiday extension on properties up to £250,000 could have a positive impact on buyers looking to move to areas outside of London and major cities in the UK.

Another area of high activity that I expect to see continue is the Buy to Let market. Whilst this may have also been boosted by SDLT Holiday, recent reports show that letting agents are seeing record numbers of enquiries from potential tenants especially where people are moving back into cities.

What lenders and brokers can do to encourage activity

Post holiday and post lockdown, we may see a greater need for specialist lending brought on by changing circumstances and diversified income streams.

For us, this means ensuring our BDMs continue to educate brokers in their local areas and spread awareness of the types of customers we can help, with using our simple and transparent product ranges.

However, discussing the specialist market more generally is just as important, as many brokers who are new to specialist lending are placing customers with Pepper Money for the first time.

In terms of what brokers can do to encourage activity within their existing customer base, my suggestions are:

  1. Label and clearly identify the specialist areas of service and products you offer so your potential customers can clearly understand how you can help them. Communicate this clearly via your website, keeping jargon to a minimum, and focus on the outcomes you can deliver.
  2. Use communication tools like email to keep in touch with existing customers. There will always be a percentage of them who may need your help at any one time, and all it takes is asking the right question. Keep yourself front of mind with regular contact.

There’s no doubt that the boom that we’ve had over the last 6-12 months has been driven by the SDLT holiday. But there are lots of other forces at play. Changes with work, lifestyle, income, and priorities as we move beyond the pandemic all mean that people will be looking to borrow long after Stamp Duty has returned to normal levels.

We’ll continue to work closely with our broker community to ensure they can help more of their customers achieve their mortgage ambitions through our specialist lending products.

To find out more about how our latest Pepper Money updates across our Residential and Buy to Let mortgages can help your customers this summer, contact Ryan on LinkedIn.