Opinion: Extension rule change could fuel more remortgage activity

Today it was announced that homeowners in England will be able to build larger extensions without planning permission.

In 2013, temporary rules –  which have allowed bigger single-storey rear extensions without a full planning application – doubled the previous limits of extensions that did not require planning permission from the local authority.

They have now been made permanent, which means people can extend their terraced and semi-detached homes up to six metres their detached houses by up to eight metres.

I am all for more freedom for homeowners, and think this rule change could have a hugely positive impact for those wanting to significantly increase the size of their homes without the stress – and expense – of moving.

And I think that, as a result of these new rules, we will see an even bigger shift towards the trends we are already starting to see – a slowdown in the number of people moving and an increase in the number of people ‘improving’ their current homes. This, in turn, has been one of the most significant factors in the recent increase in remortgaging, as people look to fund these extensions through borrowing more.

However, is this not just a quick fix? As I have said before, one of the main problems in the housing market at the moment is stamp duty. Stamp duty is absolutely stifling the market because it is making moving such an expensive thing to do.

Combine this with the uncertainty that Brexit is bringing, and people are understandably, becoming increasingly put off from moving home.

However, do we really want a situation where, instead of a healthy housing stock with a range of different sized homes for the different needs, wants and budgets of first time buyers, single people, couples, families, retirees and every other demographic, we end up with a huge number of homes of the same size?

Because, do not forget, when the owners of these homes then go to sell, their three-bed semi has now rocketed in value thanks to the six-foot extension on the back. It is no longer in the price range of the second-steppers that would have bought before.

So instead of moving, those send steppers then extend their ‘first-time buyer’ mid-terrace, making it unaffordable for the next generation of first-time buyers, and so it goes on.

I have no problem with this rule per se, in fact, I think it is positive – but I think these types of incentives need to work with the rest of the housing market so that people have a choice.

Those who want to move should be able to do so, those who want to extend should too. At the moment, there is not much choice, which is why, whether they want to upsize or downsize, homeowners are staying put. Those looking to downsize to release cash are staying in large family-homes and releasing equity, while those who want more space are extending to create large family homes.

The answer here is a huge shakeup to stamp duty – if it does not happen soon, we are going to create a whole wealth of problems that we will not be able to fix.

John Phillips is national operations director at Just Mortgages and Spicerhaart


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