Six Out of Ten Brits Hit the High Street as Lockdown Measures Eased

The gradual easing of lockdown restrictions is set to trigger a major spike in consumer spending, which is likely to help jump-start the British economy in the run-up to the summer. A report published this week by Deloitte found that despite the UK’s widespread adoption of online shopping, the number-one priority for most leisure-seekers right now is “going to a shop”.

Meanwhile, research from the EY Item Club suggests that the UK economy will experience its fastest growth since contemporary records began over the course of this year, having “proven to be more resilient than seemed possible” in the wake of the COVID-19 crisis.

EY Item Club recently adjusted its economic growth forecast for 2021 from 5% to 6.8%, suggesting the fastest growth ever officially recorded by the Office for National Statistics.

A return of consumer confidence

GDP plummeted by an all-time record of 9.9% last year, with economic activity having ground to a halt for the vast majority of consumers, businesses, and government offices. Following the worst year on record (according to ONS figures), analysts now believe that the economy will bounce back to pre-COVID levels before the end of Q2, three months earlier than expected.

Despite the economic uncertainty that has plagued almost every UK household throughout the pandemic, research from Deloitte suggests that consumer confidence is growing at its fastest rate in over a decade. A survey conducted on 3,000 adults last month found that at least 60% of adults planned trips to shops as soon as the lockdown restrictions eased.

“The UK is primed for a sharp snapback in consumer activity,” said Ian Stewart, chief economist at Deloitte.

“High levels of saving, the successful vaccination rollout, and the easing of the lockdown set the stage for a surge in spending over the coming months.”

Unemployment forecasts for the year were also significantly stepped down by EY Item Club’s economists; the previous 7% prediction was revised down to a new 5.8% by the end of the year.

“While restrictions have caused disruption, lessons learned over the last 12 months have helped minimise the economic impact,” commented EY’s chief economic adviser, Howard Archer.

He went on to predict that the UK economy will “emerge from the pandemic with much less long-term ‘scarring’ than was originally envisaged and looks set for a strong recovery over the rest of the year and beyond.”

Shoppers hit the high street

Non-essential retail establishments were permitted to welcome customers once again on April 12 in England and Wales. Scotland’s High Street was back in business as of April 26, while shoppers in Northern Ireland were able to visit stores once again as of April 30.

How Coronavirus Has Radically Changed the Priorities of Homebuyers

COVID-19 (and three consecutive national lockdowns) have had a major impact on the lives of every person in the United Kingdom. In particular, real estate market activity has illustrated how thousands of movers and first-time buyers have completely changed their priorities with regard to preferred property types and locations.

According to the latest figures from Rightmove, London has been overtaken by Cornwall for the first time as the UK’s most desirable location for residential properties. Devon has also been propelled in the rankings to third, while Dorset now sits in 10th position after previously ranking 20th.

The findings come as no surprise to the vast majority of UK estate agents, who throughout the pandemic noted a major spike in interest in rural homes, countryside properties, and larger residential dwellings with gardens.

Interest in city centre flats and urban homes with convenient transport connections has been diminishing throughout the COVID-19 crisis as the UK gets used to a new era of working from home and spending more time than ever indoors.

A larger home is a priority for buyers

The figures released by Rightmove suggest that sales of larger homes are accelerating significantly across the country, resulting in a major shortage in inventory in some locations.

For example, five-bedroom detached home sales have increased by as much as 38% over the past year, compared to the 15% increase in sales volumes for four-bedroom flats. Five-bedroom and four-bedroom bungalows have also skyrocketed in popularity, achieving 22% and 20% growth, respectively.

Meanwhile, private renters are likewise setting their sights on entirely different rental properties, predominantly away from busy urban centres. Two-bedroom and one-bedroom flats were the most sought-after rental property types in February last year; this year, it is two-bedroom semi-detached and detached houses that have topped the rankings.

“More space has always been the most common reason for people moving home, but the evolution for many, from balancing their laptop on the end of a bed last March to making an office a permanent addition to a home, has led to a need for even bigger homes than before,” commented Rightmove’s director of property data, Tim Bannister.

Estate agents expect a gradual return to normalcy

The lingering effects of the COVID-19 pandemic could result in a permanent or semi-permanent alteration to the priorities of buyers and movers across the United Kingdom; however, many estate agents believe that the current shift in interest will gradually wane, ultimately paving the way for a slow return to normality.

This is attributed to the fact that record demand for certain property types in desirable areas of the country is already resulting in major property price increases. Average house prices in regions once considered less desirable than their central urban counterparts are predicted to skyrocket, effectively pricing many movers out. At this point, it is inevitable that many will once again have no choice but to set their sights on more affordable urban dwellings, at least partially reversing the mass exodus away from central city living.

UK House Prices Continue to Climb as Stamp Duty Deadline Looms

Since it was announced, the March 31 stamp duty holiday in England has been predicted to result in a slow but steady decline in average property values. Following an initial rush of interest, the number of prospective buyers looking to purchase homes prior to the deadline has gradually diminished over recent weeks.

Nevertheless, new data from Rightmove suggests that not only is property market activity still relatively high, but that average house prices continued to rise throughout January and the beginning of February. Specifically, average property values increased by approximately 0.5% over the course of a month, following three months of consecutive losses.

The data published by Rightmove tracked average property values from January 10 to February 6.

Property purchase intent remains high

Compared to the same time last year, Rightmove reported an increase in website activity of more than 45% during the first week of February. Additionally, agreed-upon purchase volumes for the same period of time were up by approximately 7%.

However, the number of new properties being listed on the market was down more than 20% from the same time last year. According to Rightmove, this could be partly to do with current lockdown restrictions forcing would-be movers to rethink their plans.

“As well as the current lockdown motivating buyer demand again, the restrictions have also been a factor in limiting new supply, leading to some modest upward price pressure,” Tim Bannister, director of property data, said.

“These are strong signs that new buyer demand is not facing a cliff-edge after March 31.”

Buyers seek alternative funding solutions

The temporary stamp duty holiday, announced by the chancellor last year, renders all primary home purchases up to a value of £500,000 exempt from stamp duty taxation. In the weeks and months following the commencement of the scheme, buyers began scrambling to secure mortgages and purchase homes prior to its expiration.

As the countdown to the March 31 deadline continues, funding property purchases with conventional mortgages from major banks is no longer an option. With so many banks still dealing with a backlog of mortgage applications, there is insufficient time left to process new applications before the deadline.

This has led to many buyers actively seeking alternative funding solutions, such as bridging finance. Many types of specialist-secured loans accessed via established brokers can reduce underwriting times to days rather than weeks.

There is still time to take advantage of the stamp duty holiday, though the help needed to purchase a property at short notice is rarely available on the High Street.

How is a Third National Lockdown Affecting the UK Property Market?

Where the UK’s property market is concerned, there is one major difference between the current lockdown and the lockdown of spring 2020.

While there may be major complications with property transactions now, the market is still technically open.

This is much different from last year’s initial lockdown, where the market in its entirety was completely closed.

Property transactions can still take place under current lockdown regulations, but the whole process calls for a more strategic and well-planned approach.

Can I still buy or sell a property?

Not only is buying and selling homes still a possibility under current lockdown restrictions, but there has also been a major surge in real estate activity over the past couple of months. This is largely due to the impending deadline of the stamp duty holiday, which ends March 31st.

With buyers across the country scrambling to ensure they benefit from the potentially huge discounts available, the real estate market remains a hive of activity, even during these difficult times.

From valuations to visits and meetings with solicitors and estate agents, the industry is indeed open for business; however, to say that it is ‘business as usual’ would be inaccurate, as there are major differences in how activities are taking place compared to the usual norms.

What kinds of restrictions do I need to be aware of?

Primarily, restrictions affecting the real estate industry concern the additional precautions that need to be taken when conducting the usual inspections, meetings, and surveys. Examples of which include:

At all times, all participants taking part in property inspections must stay 2 metres away from each other.

Though not a formal legal requirement, experts insist that wearing masks should be considered mandatory during all meetings and inspections for all participants.

The current occupants of the property should, if possible, vacate the home a minimum of 30 minutes before the arrival of those visiting it.

Keeping all windows and doors open will reduce the risk of virus transmission through the circulation of fresh air.

All surfaces and door handles should be spotless and disinfected before and after every visit to reduce the risk of surface transmission.

Under no circumstances should meetings or visits be conducted if any participant or current occupants of the property display signs or symptoms of COVID-19.

Real estate agents, surveyors, and others who are conducting meetings and surveys must take responsibility for reminding both visitors and occupants to follow all applicable social distancing guidelines.

These and other restrictions are likely to apply for the foreseeable future, even after current lockdown restrictions are eased.

Will the restrictions delay the purchase process?

It is perfectly possible that the current complications that the sector is facing could result in delays in completing property sales and purchases, and it is advisable to allow additional time and factor potential delays into your plans.

For more information on any of the above or to discuss property transactions under lockdown restrictions in more detail, contact a member of the team at UK Property Finance today.

Are Covid-19 House Hunters Bending or Breaking Lockdown Laws?

One of the biggest differences between the current lockdown and the first lockdown last March is that most of the economy has remained up and running. The real estate sector suffered heavily during the first lockdown, when it was forced to shut down entirely for several months.

Today, buying and selling houses across the United Kingdom is perfectly possible, albeit with added precautions that need to be taken for health and safety reasons.

But what is causing concern for some is that a good deal of COVID-19 house hunters are apparently pushing the boundaries of what is acceptable, in some instances travelling hundreds of miles to view homes.

In-person property inspections are still permitted in England, and property purchase intent remains high in the countdown to the March 31 stamp duty holiday expiration date. Nevertheless, real estate agents have noted a sharp rise in the number of people travelling long distances to view second homes they intend to purchase.

The government continues to recommend virtual property inspections and meetings where possible, a compromise many (if not most) buyers remain unwilling to make.

The government’s rules on house viewing

Some estate agents have spoken of declining viewings from prospective homebuyers intending to travel over 400 miles to view a potential second home. First-time buyers are being shown more leniency than those simply interested in extending their portfolios, given the difference between essential travel and unnecessary journeys.

However, the UK’s property sector has acknowledged the lack of clarity on the part of the government with regard to buying, selling, and viewing rules. As has been the case throughout much of the past year, there is a degree of ambiguity in the policy regarding what is and is not allowed.

For example:

  • There are currently no laws, rules, or direct restrictions with regard to people viewing properties on the market during the lockdown in England.
  • The government has stated that virtual meetings and inspections should be carried out where possible, though this is not a formal requirement.
  • Any in-person viewings that take place should be conducted in accordance with all applicable health and safety protocols and social distancing guidelines.
  • No specific restrictions have been outlined regarding how far anyone can travel to view a property they intend to purchase.
  • There are no differences in the rules for buyers with different intents: first-time buyers, second-home buyers, buy-to-let investors, and so on.

It is therefore entirely up to the prospective buyers and the agents they work with to exercise common sense throughout the process.

With no specific legislation in place regarding the distances that can be travelled to view properties for sale, those choosing to travel hundreds of miles to view prospective homes are not breaking any laws. Nor are the estate agents that choose to arrange viewings for prospective buyers from halfway across the country.

A spokesperson from the Ministry of Housing, Communities, and Local Government simply reaffirmed the importance of those involved taking responsibility for their actions.

“All parties involved must continue to play their part in reducing the spread of the virus by following our guidance to make COVID-19 secure,” the spokesman said.

Furloughed Workers Are Increasingly Seeking Broker Support for Mortgage Applications

New research suggests that residential mortgage brokers are conducting more searches on behalf of furloughed workers than at any time since the height of the initial UK lockdown. According to a report published this week by Knowledge Bank, the term ‘furloughed workers’ is once again within the top five searches being carried out by brokers for residential mortgage customers.

This suggests that the chancellor’s confirmation of the extension of the furlough scheme has encouraged many prospective home buyers and those interested in remortgaging their properties to go ahead with their plans, despite the economic impact of the second lockdown.

Brokers are reporting a wave of interest from borrowers unable to qualify with conventional High Street banks, the vast majority of which make it extremely difficult for furloughed workers to obtain a mortgage or refinance their home. Use our mortgage calculator in the UK to find out just how much a mortgage would cost you.

There’s also evidence to suggest that the impending end of the temporary stamp duty holiday is motivating many to take action in order to save thousands of pounds on the purchase of their property.

‘Soft footprint at decision in the principal stage’ search volumes up

Other popular search terms among mortgage brokers once again within the top five indicate that customers with low credit scores (or concerns about their credit history) are also approaching brokers for help in growing numbers. Soft footprint DIP searches are ideal for those who have reason to believe their application may be rejected, to subsequently protect their credit score from further harm if they are refused a loan or mortgage.

Interest in the government’s Help to Buy scheme also remains elevated, according to the figures from Knowledge Bank. The lender also reported elevated numbers of ‘first-time landlord’ searches among brokers in the buy-to-let market, along with the first ever entry of ‘first-time bridges’ within the top five searches conducted.

Impressive overall market performance

Despite the obvious complications the sector faces at the moment, the figures from Knowledge Bank suggest that the market is performing better than most could have realistically predicted.

“The only constant at the moment is change. With the furlough scheme back, discussion around an extension to the stamp duty holiday, and record numbers of mortgage approvals, the property sector continues to move at a rapid pace,” commented Matthew Corker, lender relationship manager at Knowledge Bank.

“Some trends are continuing, with max LTVs again being a hot topic. Lenders are responding, and in November, many LTVs were gradually increased back to pre-Covid-19 levels; however, an increase in new broker searches such as soft footprint DIP and ‘First Time Bridgers’ shows how the market is constantly changing.

“Lenders are constantly adapting criteria to keep up with the evolving market. It is now physically impossible for any mortgage broker to keep all the different criteria in their heads. So, it is now more important than ever for brokers to use a comprehensive criteria search system to ensure they can provide their clients with the best advice and evidence that they have done so.”

Rental Sector Thrives During Lockdown due to Job Losses, Break-Ups

While Britain’s housing market sales have experienced a slowdown during the lockdown, the private rental sector has been buzzing with activity. In fact, the latest report from Rightmove suggests that demand for lettings across the UK is currently 22% higher than it was at the same time in 2019.

As lockdown restrictions are gradually eased, the pent-up tension and aggression of frustrated movers are making their mark on the sector. Such is the demand for rental properties that experts believe inventory will be reduced quickly, possibly leading to a surge in the average monthly rent prices in key areas.

Interest in all types of rental properties initially plummeted when the lockdown was first enforced, though it has skyrocketed since. Experts have cited job losses, relationship breakdowns, and the simple desire to change their surroundings as key reasons why renters in record numbers are looking to relocate.

An influx of interest

In stark contrast to the huge fall in visitor numbers seen towards the beginning of lockdown, Rightmove reported the busiest day in the history of its website on Wednesday, May 27, 2020. Six million people visited the online property portal, of which a sizeable proportion were on the lookout for rental properties and hoping to move as quickly as possible.

“They may need to move for a job,” said Rightmove.

“In this environment, there is a need for people with specialist jobs to be in a certain place. Just think about the nightingale hospitals that have sprung up.”

“Where some people have enjoyed lockdown, others have had relationship breakdowns, and this has had knock-on consequences.”

“There could be people who need to move because of job losses too.”

“And working from home has left a lot of people looking for a change in surroundings.”

“Effectively, we have two months of pent-up demand that needs to be satisfied.”

Supply is unable to meet demand

Demand for rental properties is well on its way to matching pre-Covid-19 peaks, though experts warn that supply will most likely be unable to keep up. While significantly more renters are searching for new homes than during the same period last year, new rental listings are down by approximately 4%.

The coronavirus crisis prompted many landlords to sell off parts of their portfolio or exit the market entirely due to ongoing uncertainty regarding the buoyancy of the market and the economy in general. A recent study found that at least 12% of renters were already struggling to pay their bills due to the COVID-19 outbreak, and many landlords have seen their income plummet as a result.

Would-be movers have already noted how landlords are becoming increasingly strict in terms of eligibility requirements and preferred tenants for their properties.

“They [landlords] are going to pick those with the best references and who can move in immediately. Those whose credit record is not the best tend to lose out,” commented Rightmove.

Spike in Housing Market Activity Suggests Return to Normality

With the peak of the Covid-19 outbreak seemingly behind us, the UK economy is slowly beginning to show signs of a gradual return to normality. The housing market has seen a tremendous spike in activity over the past few days, as movers and renters seek to make the most on the easing of lockdown restrictions.

With millions known to have put their relocation plans on hold when the coronavirus crisis took hold, a predicted wave of pent-up demand is now set to be released across the country.

Since the housing market was officially reopened by the UK government buyers and renters are now allowed to both view properties and move for the first time since lockdown was enforced. Surveyors and estate agents are also allowed to resume their normal activities, though strict social distancing rules still apply.

All of which has resulted in a 4% increase in visits to Rightmove’s website year-on-year, an impressive 5.1 million visits being recorded by the online estate agent. Importantly, Rightmove stated that sales enquiries are now back to around 90% normal levels, suggesting it is not far to go before the housing market returns to normality. Work out how much it would cost you to purchase a home using our UK mortgage calculator.

Property listings are also on the up

While the number of properties being listed on the Rightmove website is still way below normal levels, this week saw the number of new homes listed increase two-fold from last week. The current listing rate is still approximately 90% lower than it would normally be, though these initial signs of forward movement are being welcomed by experts across the sector.

“The traditionally busy spring market was curtailed by lockdown, but we’re now seeing clear signs of returning momentum, with the existing desire to move now being supplemented by some people’s unhappiness with their lockdown home and surroundings,” Rightmove director Miles Shipside said in an interview with the telegraph.

“With no new seller asking price data it is too early to comment on price movements, though high demand is needed to support a stable market. If there are attractive lower deposit mortgages available, it would help sustain the recovery in activity.”

Global head of research at Knight Frank, Liam Bailey, warned that economic growth in general will be sluggish for the year, with the estate agent having predicted average property price decreases of between 5% and 7% by the time the year is out.

However, most of the decline already occurred in the period between March and May, the company reported.

“We can be fairly certain that this year we will see one of the sharpest falls in economic growth in peacetime,” said Mr. Bailey.

“It is challenging to get a handle on what is happening to pricing right now. Published indices tend to be backwards looking, and those that have been published since the crisis began have inevitably drawn on limited data points.”