The Intermediary Mortgage Lenders Association (IMLA) and Society of Mortgage Professionals (SMP) issued statements emphasising the stark reality of the situation.
They highlighted some borrowers were already likely to miss the 31 March stamp duty holiday and could lose their property purchase altogether if they did not have funds to cover the stamp duty.
And they added that this situation could grow in severity with the renewed lockdowns around the country.
‘Sales may fall through’
IMLA executive director Kate Davies noted the housing market was still open despite Britain moving into a third lockdown, “but the mortgage market remains under extreme pressure to process a large number of buyer applications before the stamp duty deadline on 31 March”.
“Lenders, intermediaries and conveyancers are battling to work through the volume of transactions as the stamp duty deadline approaches,” she said.
“Borrowers must remain realistic about what could happen if they are unable to complete before the 31 March because, if they cannot, they will be liable to pay the stamp duty due. If they can’t find the funds they need, their sale may fall through.
“IMLA has been clear about the need to manage consumers’ expectations – but the imposition of a third national lockdown will undoubtedly cause disruption for some buyers.”
Davies concluded by urging the government to offer a lifeline to those stuck in limbo.
“There have been many calls on the government to consider some form of extension or tapering of the stamp duty holiday, giving buyers the breathing space they need to complete their house purchase before the deadline.
“Surely the time has come for the government to respond and ease the pressure on the system.”
Pressure mounting on legal teams
The SMP added its voice, warning brokers to prepare borrowers for the likelihood they will miss out on the stamp duty saving that they were expecting.
SMP chairman David Thomas said the demand for property because of the government’s tax incentive had exceeded expectations and it was vital borrowers had a clear understanding of what to expect.
“We know that lenders have been desperately trying to temper demand through a variety of pricing and criteria changes, but that hasn’t stopped the recent wave,” he said.
“That pressure is now starting to move into our legal colleagues’ hands, and with just a few months still to go, the management of clients’ expectations will be critical.
“It is likely some will miss the deadline, and while some may still benefit from recent house prices, there will inevitably be a focus from clients in this area.”