The government is under mounting pressure to implement tighter restrictions to stem the transmission of the coronavirus pandemic. Yesterday, the daily figures around the pandemic revealed that over 1,500 people had sadly lost their lives. A high not seen since the first pandemic.
But what would tighter restrictions look like to the property market. At the time of writing this, the Scottish government have implemented tighter restrictions, but as of yet these have not closed the country’s property market. So what should the English and Welsh government’s consider?
Dr Tom Quirke, Managing Director at SearchFlow, commented:
“I’m sure we can all agree that safety for everyone involved is paramount. The reason the housing market was able to re-open during the first lock-down was that the industry pulled together quickly to ensure procedures and working methods were made safe. I’ve been impressed at how the industry as a whole has adapted to the restrictions we face. This includes the greater adoption of digital tools such as virtual viewings and completely electronic documentation processes. This has enabled viewings, conveyancing and moving to continue over recent months. People need to continue moving for a variety of reasons as they go through life’s ages and changes, including for health, finance and work reasons. Finally, the industry itself cannot simply turn on and off; the industry took 5 months to reach full capacity after the first lockdown. The impact of this is the economic effect of stop-start has huge consequences on multi-£Bn economic flows and I would advocate for keeping the market open.”
On Friday 8 January, property portal Rightmove revealed that site visits had increased by 30% compared to the same time the previous year.
Tim Bannister, Director of Property Data at Rightmove, said:
“January is usually one of our busiest months of the year as people start to make new year plans to move, as was the case at the start of last year when we also had the post-election bounce that gave hope of an active spring market, before that all changed with the temporary closure from March until May.
“We didn’t know how this year would start with so much change and uncertainty around restrictions, but it’s been reassuring for those people hoping or needing to move that the demand we’ve seen so far is the highest we’ve ever had in January.”
Would the housing market close?
I suppose, the one thing that everyone is worried about is the closure of the housing market. During the first lockdown, the market was closed for three months. Couple that with the Chancellor’s announcement of a Stamp Duty Land Tax (SDLT) holiday and people spending more time at home, the results caused a mini-market boom.
The conveyancing profession and the stakeholders involved in the housing transaction pipeline saw a surge in workload, often at times when staff numbers were limited due to Covid-secure safety measures. This has resulted in log jams and has on average increased the time a housing transaction takes from 12 weeks to 20 weeks.
As it currently stands, the housing market remains open. And all those stakeholders involved in the process are able to function. However, with regards to estate agent viewings it’s advised prospective buyers view the home virtually first.
Research conducted recently by letting and estate agents, Benham and Reeves, has revealed that 81% of homebuyers and sellers are undeterred by lockdown 3.0.
Out of the 10,000 homebuyers and sellers surveyed, 50% of those asked, stated they didn’t feel safe hosting or attending a viewing while 41% did and 9% preferred not to say.
However, there could be a slight sting in the tail for estate agents, and potentially the first hint of disruption for the 2021 housing market. London Mayor Sadiq Khan, has reportedly written a letter to the Prime Minister, asking him to reassess what counts as ‘essential retail’, referencing that some businesses, including estate agencies, should indeed close like they did in the initial lockdown. Although in his letter Mr Khan is only referencing agencies in London as he battles to keep the virus under control, it would be interesting to see if a nationwide approach would or could be adopted by the PM.
Stephen Desmond Legal Trainer, took to LinkedIn to share his thoughts. He wrote:
“Unhelpful confusion created by the government’s latest Covid advice needs urgent clarificarion, in my opinion here’s why:
“The guidance: ‘It may become necessary to pause all home moves locally or nationally for a short period of time to manage the spread of coronavirus. We will let you know if this needs to happen. If you are about to enter into a legally binding contract, you should discuss the possible implications of COVID-19 with yuor legal professional and consider making contractual provisions to manage these risks.’
“My View:
“1) The unnecessary uncertainty created by this statement will only heighten anxieties felt by conveyancers who are already working flat out to try and complete transactions by 31 March.
“2) It will make homemover clients more jittery, as increasing numbers will now fear, with justification, they will miss out on SDLT savings
“3) If the government was minded to suspend homemoving, then it should have done so by formal announcement, with a clear start date and an indication of the likely duration of such suspension period or, at least, of the circumstances in which the suspension would be lifted
“4) If the government does make formally announce a suspension, the the #StampDutyHoliday must be extended; or thousands of transactions will fall through.”
Extension to the SDLT holiday
The SDLT holiday can seem a bit like a double edged sword by some. It has undoubtedly had a positive impact on the housing sector and helped to create the mini-bounce that was witnessed, and arguably is still progressing, to reinvigorate the market following a three month hiatus.
Many in the conveyancing profession have embraced the holiday, but now with calls to extend the holiday, it has meant that some have voiced concerns that an end has to come at some point. Many in the profession are over worked and under immense pressure from clients who want to make the most of the holiday. But with logjams and a transaction taking approximately 20 weeks to complete, some have undoubtedly missed the boat.
Now the Daily Telegraph has launched a national campaign, and the Conveyancing Association, Society of Licensed Conveyancers and the Bold Legal Group have approached the Chancellor looking for a reprieve. A media release issued by the three organisations stated:
“With the Prime Minister hinting that the current Covid restrictions could be extended to the property market, the situation is even more parlous and surely an extension to the SDLT Holiday must follow.”
Meanwhile one of the online petitions set up imploring the Chancellor to extend the holiday has amassed almost 100,000 signatures and still growing – 20,000 more than 48 hours previously.
However, an extension isn’t something that would be welcomed by all.
According to market research from MovingHomeAdvice.com, when asked what their motivation is for buying a property at the moment, only 29% of home buyers named the Stamp Duty Holiday.
With house prices at an all time high, many outlets and commentators are of the opinion prices and market demand will tumble once the stamp duty holiday has ended in April.
But these findings suggest that the housing market will remain strong throughout the next 12 months at least because almost 40% of buyers confirm that they would be looking to buy regardless of the current political, or socio-economic climate.
Russell Quirk, In-house property expert for MovingHomeAdvice.com, said:
“Despite the stamp duty holiday having a clear and positive impact on the housing market, this survey proves that it is not the only thing underpinning the market as many would have you believe.
“As such, if it does indeed end on March 31st, it will not be the catastrophe that many are thinking because there is far more at play.
“Whilst agents may be screaming at Sunak on the TV, pleading for him to extend the tax relief, they should take comfort in the fact that it appears the market will stay strong regardless.
“There are some people suggesting that all of the 250,000 transactions currently in the UK property pipeline will fall-through the instant we reach midnight on 1st April. This is bonkers and wrong. Even if the stamp duty holiday does end as currently scheduled, many of those transactions will have already completed, and 30% of those which haven’t will be first-time buyers who are exempt from SDLT anyway.
“Therefore, those who are feigning hysterics that everything in the pipeline will fall-through are being swept along by media hyperbole.”
I think we can all agree that something does indeed need to be done to curb the spread of the coronavirus. However, whatever decisions are made need to be made in a timely manner with provisions made for those who are impacted.
If you were the Prime Minister and the Chancellor, what would you do?
