Mortgage approvals fell again in August as buyers adopted a more cautious approach ahead of next month’s Budget, but a conveyancing expert has warned that economic uncertainty is only one part of the problem slowing Britain’s home moves.
New figures from the Bank of England show net mortgage approvals for house purchases fell to 54,900 in August, down from 55,900 in July and below the average of around 60,100 recorded over the previous six months.
Approvals for remortgaging with a different lender also fell, from 34,600 in July to 34,000 in August, while the effective interest rate on newly drawn mortgages increased from 4.45% to 4.60%.
Industry commentators have linked some of the caution in the market to buyers waiting to see what is announced in the Budget on 28 October, particularly first-time buyers awaiting further details of the Government’s new Your First Home scheme.
However, Emma Morris, Partner in the Residential Conveyancing team at Brethertons, says the figures highlight only part of the challenge facing buyers and sellers.
She says increasingly complex legal and regulatory requirements can have a significant impact on how quickly transactions progress, particularly when information or documentation is not available at the outset.
Emma said: “It’s no surprise buyers are waiting for the Budget, especially first-time buyers who want to know how Your First Home will work. But in my experience, it isn’t rates or the Budget alone that slow a home move down. It’s the technical work behind the scenes.
“Anti-Money Laundering requirements are among the areas which can add complexity to a transaction, particularly where deposits have been built up over a long period, include gifts from family members or involve money moving between different accounts
“We often spend more time tracing where a buyer’s money has come from than we do reviewing the title documents. If someone has been saving for a long period of time or moving money between accounts, we must trace every step, and missing documents can cause a delay.
“In addition, it is widely discussed that conveyancing standards across the profession appear to have slipped in recent years and title issues are more prevalent than ever before. This all adds to the delays clients face when selling or buying their homes.”
Leasehold transactions continue to face the longest delays with the Conveyancing Association saying it takes an average of 54 days from payment to obtain LPE1 and FME1 leasehold management information.
Emma, who is also Brethertons’ deputy Money Laundering Officer, believes buyers and sellers can reduce the risk of avoidable delays by instructing their conveyancer early and having key financial documentation ready.
She added: “If you are thinking about buying or selling after the Budget, don’t wait until then to get organised. Instruct your conveyancer early, gather your bank statements and proof of where your deposit is coming from, and ask who will be handling your file and how experienced they are. It really can make a difference.”
The Government announced Your First Home on 26 September, with the scheme expected to enable eligible first-time buyers to purchase new build homes in England with deposits of 2.5%, supported by a government equity loan of 20%.
Further details, including income and property price caps, costs and the timetable for the scheme, are expected to be confirmed at the Budget on 28 October.
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