Mortgage approvals to drop by 350,000 in 2020
More than 150,000 mortgages to first time buyers will be lost, as a total of 526,000 home sales go up in smoke, with a significant knock-on economic impact, according to estate agent Knight Frank.
It means £7.9bn will not be spent on DIY and renovations, while £395m less will be spent on removals companies.
The government could be looking at £4.4bn lost from stamp duty and £1.6bn in VAT, Knight Frank calculated.
Simon Gammon, managing partner at Knight Frank Finance, said: “It’s become increasingly clear lenders are eager to do business.
“Two weeks ago many banks retreated to the safety of more conservative lending criteria as they were overwhelmed by calls in the wake of two Bank of England rate cuts and the shut-down of many international call centres.
“But in recent days we’ve seen the major lenders coming back, raising the loan-to-value ratios they are willing to lend at, eager to gain market share. All they need to get the borrowers moving is a functioning housing market.”
The agency has called for “urgent government stimulus” to reignite the housing market after the pandemic.
Knight Frank said a stamp duty holiday should be implemented and Help to Buy extended.
The conveyancing process should also be reviewed, virtual planning meetings introduced and greater flexibility around planning to speed up and create efficiencies.
Liam Bailey, global head of research at the firm, said: “Despite the fact the government will forgo a significant amount of stamp duty revenue in 2020, it seems clear there will need to be a stamp duty holiday to actually get the market moving once the lockdown is lifted, but this move alone will not be enough.
“There will need to be moves across a wider number of areas including an extension to Help to Buy to support first time buyers and support activity across all price bands.”