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Category: December 2020

Labour Calls for Property Market Shut Down

The Labour Party is urging the government to effectively close down the property market in England.

Labour leader Sir Keir Starmer yesterday said he wanted to put a halt to moving house, renting apartments and all property viewings by estate agents.

His reasoning rested on the closure of schools which, he said, made no sense when property viewings were still permitted and garden centres remained open. In fact, allowing both were adding to the government’s already mixed messaging and confusing the public even more, he insisted.

Property market should follow first lockdown’s example

Sir Starmer also highlighted that the COVID-19 infection rate was higher now, with more people in hospital today than in March to May. At that point, during the first lockdown, all property viewings were banned under lockdown restrictions. Instead viewings were conducted via recorded videos or agents livestreaming their own viewing via mobile phone.

He told BBC reporter Laura Kuenssberg: “We are in at least as serious, if not a more serious position than in March of last year, [and yet] we’ve got fewer restrictions in place.

“I think we are going to have to look in the next 24 hours or so, what are the other measures that could be put in place, and hear from the scientists as to which of those that they think are more effective, and then all pull together and support those measures if they’re needed because the numbers are still, as everybody knows, heading in the wrong direction.”

Some estate agents have agreed with Mr Starmer with at least one business in Kent halting all face-to-face viewings with staff and clients, citing ‘moral’ reasons.

Johnson admits tougher restrictions an option

Mr Starmer may yet get his way since even Prime Minister Boris Johnston admitted yesterday that tightening down of the rules – including halting property viewings – may still be necessary. 

“We’re going to keep the rules under constant review, where we have to tighten them, we will,” he said. “Of course, if we feel things are not being properly observed, then we may have to do more.”

Many agents, surveyors and conveyancers are currently working overtime trying to get house transactions through in time to meet the Stamp Duty Holiday deadline on March 31. A sudden halt to the property market would effectively put an end to many of these sales immediately. Or, it could mean the deadline being extended. This had been ruled out by Chancellor Rishi Sunak prior to the Christmas lockdown.

The Government hasn’t confirmed any intention to tighten up rules and have dismissed the Labour Leader’s criticism of their handling of the pandemic, insisting they have always been ‘fast to act.’

However, guidance on the government’s website says that it “may become necessary to pause all home moves… for a short period of time to manage the spread of coronavirus.” It also provides information for tenants and letting agents.

Property Market Enjoys Best Christmas in a Decade

Gloomy predictions of a slowdown in the housing market towards the end of the year were completely blown out the water this week. Instead, the housing market enjoyed its busiest and best Christmas in more than a decade.

According to the Bank of England more than 100,000 households were given the go-head to go forth and buy property in November. At 104,969 mortgages, it was the largest number granted since summer 2007. It also exceeded predictions by more than 20,000.

Of course, the Stamp Duty Holiday had a huge impact, as did the desire for many city dwellers to move to a bigger house and greener surrounds, following lockdown and home working.

And as for 2021? The end of the Stamp Duty Holiday is, of course, expected to see a decline in the number of house purchases. And no wonder – from October to March this year, buyers could save up to £15,000 on a house purchase – an incentive for anyone who’d been planning to move house last year. 

But more telling yet, will be the end of the furlough scheme in April. Thanks to the roll out of the vaccine, this is expected to be the last coronavirus ‘jobs rescue scheme.’ Unemployment figures are then expected to be rise and it’s this which is expected to have the biggest impact on the market all year. 

The uncertainty of house prices

Meanwhile, one of the big lenders Nationwide, reported a 7.3% rise in house prices year-on-year in its final House Price Index of 2020.

But could 2021 be a different story in this respect? Well, not according to property portal Zoopla, which confidently predicts a 1% rise. Tell that to the Centre for Economics and Business Research (CEBR) though, which expects a 5% drop.

Brexit no longer a threat to property market

Even Brexit is no longer viewed by many as a big challenge to the property market after a last-minute deal was secured on Christmas Eve, making the economic future seem far less rocky.

Mortgage availability, together with low interest rates, is in the property market’s favour. Both of these are firmly in place at the moment, with more mortgage products appearing daily. There are even suggestions that the Bank of England base rate may go even lower, resulting in negative interest rate territory. The reason being that this would prompt more investment in the very much ailing UK economy. The Chancellor was facing around 2 trillion of a debt deficit at the last count.

New deal for first time buyers

Help to Buy has returned – but in a slightly different format. This time round first-time buyers will find a cap on New Build housing costs. Those properties eligible for the scheme will be capped at 1.5 times the average property price in the region. 

Once again, the funding will be 20% of the cost of the property, increasing to 40% in London. But crucially, stringent quality controls have been promised, together with a guaranteed new home warranty prior to purchase. It should encourage more first-time buyers to invest. The fact remains though that the number of houses being built here in the UK remains woefully short of its target to meet a growing need.

2021 Changes to ‘Relief’ Bills Introduced During Pandemic

There will be no Stamp Duty Holiday extension next year, the UK government has announced. 

Their statement, revealed just before Christmas, was in response to a nationwide petition urging the government to extend Stamp Duty relief past its current deadline of March 31, 2021. The petition, signed by those in the industry, was presented to parliament with more than 28,000 signatures.

The government responded to the demand by saying that the idea behind the abolishing of Stamp Relief in England and Northern Ireland for homes up to £500,000, was to introduce an immediate stimulus for the market. 

Introduced in July, the Stamp Duty Holiday certainly did its job, sending the property market reeling at times. Demand for housing had already been high due to lockdown but the opportunity to save up to £15,000 on homes worth £500,000 was the final push many keen but undecided buyers needed to move.

First-time buyers only Stamp Duty Absentees 

Only first-time buyers will continue to enjoy Stamp Duty relief for homes valued at up to £300,000, and 5% for anything after that up to £500,000 after the Holiday cut-off date.

The rates for those who are already home owners, are due to revert to 2% on properties priced £125,001 to £250,000, 5% on homes valued at £250,001 to £925,000 and 10% for property from £925,001 up to £1.5m.

Surcharges for second home owners and overseas buyers 

Buy to let landlords and those who buy a second home will pay an additional 3% on top of the existing Stamp Duty rates. In Wales, following a new ruling this month, the additional levy for second homes valued at up to £180,000 is 4%. For homes worth £1.6m or more in Wales, the Land Transaction Tax (LTT) is 16%. 

Overseas buyers can also expect to pay a Stamp Duty surcharge – of 2% – for any property they purchase in England and Northern Ireland.

Mortgage payment holidays to end March 31, 2021

The huge help for current homeowners who had lost their jobs or faced furlough in 2020, was the Mortgage Payment Holiday. This too will come to an end at the beginning of April, with no current plans to extend it. 

Rental evictions postponement

Due to coronavirus anyone served a Section 21 (or other eviction notice) between 29 August 2020 to 31 March 2021, must have been given six months’ notice, by law. Less than this and the eviction hearing won’t go ahead. Only in serious breaches of Tenancy Agreements, such as anti-social behaviour and non-payment of rent for up to six months, will the six months’ notice rule be abandoned. The ruling applies to all property in all Tiers, not just the most severely restricted areas.

Bailiffs banned until January 11, 2021

Coronavirus measures mean no bailiff possession cases can take place in England and Wales until January 11, 2021. Again, this is regardless of Tier. Due to the fact that 14 day’s notice must be given of an eviction taking place, the first bailiffs visits won’t be until January 25 next year.

Reactivation notices needed for repossession

Tenants issued with a claim for property possession prior to August 2, 2020 must be sent a ‘reactivation notice’ by the landlord as well as the court. The landlord must outline whether the tenant has suffered a loss of income as a result of the pandemic, or whether they have been shielding etc. Failure to supply this info will mean the repossession hearing won’t go ahead. 

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Why flats are out of favour

No-one can deny the UK property market has been riding high in recent months. Since the first lockdown was lifted in May, surveyors, estate agents and conveyancers have been kept busy and there is now a huge backlog of transactions following the high demand to sell and buy.

indeed, in October Halifax recorded a record average high in the price of property over the past year – year-on-year growth of 7.5%. However, break the figures down further and you will find houses – regardless of whether they are detached or semi-detached – faring far better than flats.

Houses twice as likely to sell

Analysis by property research company PropCast shows only 27% of flats listed are selling, compared with 44% of houses countrywide. Furthermore, flats in London are taking up to 70 days to sell compared to just 29 days for houses, according to upmarket estate agents Hamptons International. This is the first time in eight years that flats in the capital have been overtaken by houses when it comes to buyer demand. So, what’s causing the rush to ditch flats?

No prizes for guessing the biggest reason, say property analysts – it’s the desire for outdoor space as a result of the pandemic and the possibility of future lockdowns. Houses tend to have gardens, flats don’t (even if some of them do have a roof terrace or balcony). And, if they can’t get a house with a garden, then many inner-city residents at least want somewhere less polluted by people as well as somewhere they can be closer to nature. You’re talking about the suburbs and villages here – neither of which are known for their high concentrations of flats.

Working from home has also increased the desire for additional space, such as a third bedroom or loft space, which can easily be converted into a home office.

First-time buyer numbers down

Another reason for the declining popularity of flats is the reduced number of first-time buyers. Flats – especially studio and one-bedroom properties – are more popular with this first rung of the property ladder because they tend to be less expensive than houses to buy. In addition, since they are younger and typically single, these buyers don’t mind being in the heart of a city where all the pubs, restaurants and entertainment venues are.

There are fewer first-time buyers because there simply aren’t that many higher loan-to-value mortgages to go around. That means first-time buyers need more money for a deposit and, as we’ve learned over recent months, it’s the younger age group that has been hardest hit by the lockdown, with many tending to be employed in hospitality, retail and tourism. Data from the Office of National Statistics shows there are now 156,000 more unemployed 16-to 24-year-olds (referred to as Generation Z) since May.

Lockdown hits luxury apartment market

But it’s not just in the first-time buyer market that flats are faring poorly. Luxury apartments in the likes of inner-city London and quayside Manchester, Liverpool and Glasgow are also plunging in value in a bid to attract buyers. In London, the popularity of plush apartments has fallen by 1.8%. That’s because wealthier buyers are also opting for housing and green space in preference to high-rise living.

Even if we get that promised vaccine (or two) for Covid-19, will the popularity of flats ever recover? Not according to BuiltPlace analyst Neal Hudson, who predicts the end of the ‘property ladder’ thanks to the increase in value of houses compared to flats.

“The idea that you could buy a flat in a city centre and then, after a few years, trade up to get a house in the same area doesn’t work now for the vast majority of people,” he said.

What it does mean, though, is that people may move sideways (ie: to “further out” locations) rather than upwards in their current city or town.

For sale sign outside an house on a street

Property Market Update

Stopped in its tracks once again, England went into lockdown 2.0 last month. But you wouldn’t have realised had you just landed and caught a glimpse of the property market.

It was – and is – still open for (plenty of) business, with estate agents and potential buyers able to physically visit properties (having first viewed them online). And it is just as well the market is still up and running considering the huge rush to get thousands of property transactions settled before the Stamp Duty Holiday is terminated at the end of March 2021. Estate agents, surveyors and conveyancers are all currently complaining about a huge backlog of transactions.

The latest data from HM Revenue and Customs (HMRC) shows that 98,010 property sales have already gone through in September alone. That’s 21% up on August’s figures and down just 0.7% on last year (before Covid-19 or any mention of lockdowns).

Properties selling in 50 days, say Rightmove

Experience from the first UK-wide lockdown showed the closing of the property market merely built up demand so that, when restrictions were lifted, the buying and selling of property went into overdrive. And, seven months on, buyer demand is still strong – Rightmove recently reported most properties on their portal as selling within 50 days.

BOE mortgage approvals highest for 13 years

House prices are still up. Land Registry’s figures for August showed the average property was priced at £239,196 – that’s a 2.2% increase on August 2019. The Bank of England added to the glad tidings by announcing that mortgage approvals last month were the highest in 13 years.

Chancellor Rishi Sunak’s Stamp Duty Holiday for property worth up to £500,000 in England and half that figure in Scotland and Wales helped, of course. So too did Covid-19 itself, with those who had never considered moving now looking for a rural retreat, garden and additional room to use as work-from-home office space.

Property portal Zoopla reports that 31% of properties sold during the months of June, July and August were in rural areas, compared with just 18% in urban locations.

House prices may remain steady until March/April 2021

The buying overdrive will peter out at some point, and at which time house prices will almost certainly take a dip. But this isn’t expected to happen, at least markedly, until next year. Many in the industry believe the end of the Stamp Duty Holiday will bring about a change in the market. But who knows if the holiday will end in March – the chancellor has received a pleading letter signed by well-known trade bodies in the property industry asking him to extend the Stamp Duty bonanza by a further six months.

He has already extended the furlough scheme again, after all, with this latest extension due to come to an end around the same time as the Stamp Duty Holiday. It’s expected the former will result in job losses. However, the prospect of a nationwide vaccination programme may make the unemployment statistics far less severe than previously predicted.

And then there’s Brexit…

There is, of course, another major event for the UK which could potentially derail the property market. And that is the possibility of a no-deal Brexit – something else that is predicted to have a negative effect on the economy and result in job losses. As a result, it could slow down transactions in the property market and therefore reduce house prices.

Then again, the property market hasn’t just survived, but flourished as a result of the pandemic (at least in the short term). And, could it be that with the intervention of the new pro-European US president we may just get a longed-for Brexit deal, after all?

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