Independent review and analysis

Stamp duty holiday – lenders under pressure

At the time of writing, despite the rumours of an extension being granted, there are around 5 weeks before the Stamp Duty holiday expires on 31 March. UK property transactions are often subject to delays and bottlenecks, but the risk of delay has never been so potentially expensive for consumers as a £400k purchase will see a £10k increase in costs if the deadline is missed.

We know lenders are trying to mitigate these costs for their customers. Part of the motivation is they want to help their customers save as much as they can, and these cost savings will help their customers’ budgets enormously. There are, of course, other factors that come into play. For example, lenders also want to avoid the cost of abortive administration when applications cancel because applicants pull out of purchases. They are also concerned that the Claims Management Company culture will kick in and they could face compensation claims when the fault for a missed deadline may be laid at a lender’s door.

It is beginning to look like the recipe for a perfect storm. While the first lockdown resulted in a record low for house purchase approvals (in May 2020), the last 3 months have seen record high numbers of applications for many lenders. The strain on them is growing as the working from home processes becoming ‘clunky’ when operating from multiple locations and with no economies of scale or internal resource coverage to help. This aspect will not change in the short-term, and certainly not before the current stamp duty holiday deadline, whenever that may be. As a result, lenders’ underwriting departments are beginning to suffer processing delays, exacerbating the problem.

Rockstead has performed several short-term and long-term contracts for lenders helping to manage underwriting workflow peaks. Our staff have supported underwriting and risk assessment functions across various business segments. We are also able to supply staff to relieve pressure in collections, compliance, customer service, training and QC areas.

If you would like to find out more, or if you would like to chat about how we can help you manage and mitigate risk, give us a call.

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