Category: Coronavirus

COVID-19 (and three consecutive national lockdowns) have had a major impact on the lives of each and 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 10^th position having previously ranked 20^th.

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

Interest in city centre apartments and urban homes with convenient good 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 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 Expects a Gradual Return to Normality

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 which 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.

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 than 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 concerned 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 2m 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 to reduce the risk of virus transmission through the circulation of fresh air.
• All surfaces and door handles should be thoroughly cleaned 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 to 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.

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 has 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 how many COVID 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 real estate sector has acknowledged the lack of clarity on the part of the government with regards to buying or selling and viewing rules. As has been the case throughout much of the past year, there is a degree of ambiguousness in the policy regarding what is and is not allowed.

For example:

• •There are currently no law, 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, safety protocol and social distancing guidelines.
• No specific restrictions have been outlined with regards to how far anyone can travel to view a property they intend to purchase.
• There are no differences in the rules for buyers with different intent – 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 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 be Covid secure,” the spokesman said.

It was not long ago that small city centre apartments with the bare minimum space were the most desirable properties for movers in the UK. Given the choice, it seemed most would have liked to relocate to major employment hotspots like London, being perfectly happy to sacrifice space at home for the convenience of urban living.

Or at least, that is how the situation looked before lockdown.

According to property portal Rightmove, homebuyers in record numbers are setting their sights on quieter and more spacious homes far from crowded towns and cities. In fact, the number of searches being carried out for properties in rural locations with smaller populations has more than doubled since lockdown was enforced.

Primarily, the desire for larger homes in quieter locations is being fueled by homeworking becoming the new norm for much of the population. Coupled with the fact that more people are spending more time in their own property (indoors or out) than ever before, the appeal of larger homes in quieter corners of the country is understandable.

Outdoor Space a Key Selling Point

Seaside towns and villages in particular have spiked in popularity among homebuyers, reports Rightmove. Irrespective of whether such a move could potentially add significant mileage to a worker’s twice-weekly commute, it is apparently a small price to pay for what is on offer.

Rightmove’s report made it clear that outdoor space has become a key selling point for homes on the market in 2020. The availability and quality of a property’s gardens and outdoor living spaces are now taking precedence over previous priorities.

Whereas it was once kitchens, bathrooms and convenient locations that sold homes, it is now manicured gardens, patios and tranquil settings.

Prices Set to Fall in 2021?

Nothing is certain for the time being, given the potential threat posed by COVID-19 and Brexit, however, some real estate watchers believe that 2021 will bring an end to record-breaking property price increases.

“There is increasing concern that the combination of significant losses over the coming months allied to the scaling back of policy initiatives in early 2021 will have an adverse impact on transaction levels,” commented Simon Rubinsohn, chief economist at The Royal Institution of Chartered Surveyors, though this does not necessarily mean that next year’s slowdown will reverse the positive movement of the past couple of months entirely.

According to the Halifax, average house prices in the UK saw their biggest monthly growth in September since 2016 – a huge 7.3% spike. This took the average UK property price to a new high of £249,870.

It is looking like good news for homeowners and anyone looking to sell a residential property in the near future. Once again, UK property prices have spiked above and beyond all expectations – August having brought about the biggest monthly boost since 2016.

According to the latest figures released by Halifax, the average price for a UK home in August has reached a new high of £245,747. This indicates a monthly increase of 1.6% compared to the average house price in July, along with a huge 5.2% increase over the same month in 2019.

The figure came in slightly under the maximum year-on-year increase of 6% some analysts had predicted, though remains remarkable performance.  Particularly when considering the fact that the UK’s economy is still finding its feet after an extensive period on lockdown, a spike to record-high house prices is a welcome indicator of a strong recovery.

Mortgage Lending Activity up 66%

This remarkable growth in average property prices has been attributed to both the Chancellor’s temporary stamp duty holiday on purchases under £500,000 and pent-up demand being unleashed on the sector post-lockdown.

In addition to the market’s impressive record performance reported by Halifax, rival lender Nationwide also indicated an impressive spike of 2% in average house prices between July and August, along with a 3.7% increase year-on-year.

Predictions of pent-up demand being released when the housing market reopened appear to have been accurate, with the Bank of England reporting an enormous 66.2% spike in mortgage lending activity between June and July. In July alone, figures suggest that more than 66,300 mortgage applications were approved by lenders in England alone.

A Housing Bubble on the Horizon?

Despite the ongoing complications brought about by the COVID-19 crisis, the UK’s housing market is nonetheless tipped for a strong recovery. Given with predictions that Britain’s GDP could contract by as much as 10% this year, the housing market is expected to continue performing with strength for the immediate future at least.

However, experts do not necessarily see the current record-breaking house price acceleration continuing, which will most likely slow over the coming months.

“Rising house prices contrast with the adverse impact of the pandemic on household earnings and with most economic commentators believing that unemployment will continue to rise, we do expect greater downward pressure on house prices in the medium-term,” commented Russell Galley, managing director of Halifax.

Meanwhile, property consultancy Knight Frank stated that while the current level of acceleration is unsustainable, property prices will continue to increase for the rest of the year. Those with larger outdoor spaces or in close proximity to green spaces in particular are expected to see ongoing gains.

Slowly but surely, some semblance of normality is returning to the way we live our lives in England. Covid-19 hotspots in some regions continue to cause concern but lockdown restrictions are gradually being eased across the country as a whole.

As predicted, pent-up demand among movers is now being released on England’s real estate sector, with some operators having experienced record activity levels in July. But what’s interesting is the way in which both home buyers and job-hunters now appear to be taking their social distancing habits to an entire new level – all entirely of their own accord.

Not only has the past fortnight seen a huge increase in the number of jobseekers looking for positions outside London, a similar spike has been noted in the number of city residents looking to relocate to quieter corners of the country.

An Exodus Underway

According to the latest figures from the Escape the City careers advisory service, the last two weeks saw twice as many jobseekers proactively looking to escape the capital as during the same period last year. For April as a whole, the number of active home buyers in London who registered their interests with estate agents in other parts of England also doubled compared to 2019.

Importantly, the apparent exodus is by no means exclusive to London. Hamptons estate agency has also reported growing interest in relocation to rural locations among buyers in Birmingham, Manchester and other major cities.

For Londoners, some of the most attractive postcodes for those looking to escape the city included Milton Keynes in Buckinghamshire, Ipswich in Suffolk and Worthing in Sussex. One of the few things all of these destinations have common is a resident population at least twice as spread out as in London.

Aylesbury Vale in rural Buckinghamshire attracted a particularly heavy attention from London-based movers during April. Whereas the proportion of people from London organising viewings in the region would normally have been less than 30% for April, approximately 44% of those signing for viewings in post-Covid England were currently located in London.

Home-Based Workforce

Along with the desire to seek safe and quiet refuge outside the big cities, the UK’s shift towards a predominantly home-based workforce for many businesses is also credited with fueling this ongoing exodus. A growing number of businesses have announced that they will not be returning to their prior and predominantly office-based operational model, even when lockdown restrictions are entirely eliminated.

The benefits of working from home for businesses and employees alike are predicted to radically change where and how millions of workers across the UK live their lives. Whether it is avoiding crowds, eliminating time-consuming commutes or simply staying safe, the potential benefits of working home are appealing to more people than ever before.

As is the prospect of escaping the city for a safe, relaxed and vastly more cost-effective lifestyle – a combination of factors expected to continue fueling the accelerating exodus for some time to come.