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Escape to the Country: City Dwellers Seek Sanctuary in Record Numbers
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 in 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 entirely 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, but a similar spike has been noted in the number of city residents looking to relocate to quieter corners of the country.
An exodus is 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 in common is a resident population at least twice as spread out as in London.
Aylesbury Vale in rural Buckinghamshire attracted 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 fuelling 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 from 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 is expected to continue fuelling the accelerating exodus for some time to come.
A Brief Round-up of UK Housing Market News
It has been a busy few weeks for the UK housing market, so we thought we would put together a brief summary of everything you need to know right now.
Halifax reports record house price gains for July
July saw average property prices reach new record highs. According to the latest Halifax House Price Index, average property prices reached £241,604 for July, an increase of 1.6% on the previous month and a full 3.8% higher than July last year.
“Following four months of decline, average house prices in July experienced their greatest month-on-month increase this year, up 1.6% from June and comfortably offsetting losses in 2020,” commented Halifax’s managing director, Russell Galley.
“The average house price in July is the highest it has ever been since the Halifax House Price Index began, 3.8% higher than a year ago.”
Pent-up demand and the chancellor’s temporary ‘stamp duty holiday’ have been credited with sparking this unprecedented monthly spike.
Rightmove share prices on the up
Record levels of housing market activity following the easing of lockdown restrictions have had a knock-on effect on Rightmove’s share prices.
According to the company’s chief executive, Peter Brooks-Johnson, Rightmove stock has surged more than 7% after more or less grinding to a halt during the national housing market shutdown. Welcome news for Rightmove shareholders, following a confirmed slump in operating profits of 43% for Q1 2020.
Investors are, it seems, apparently setting their sights on the long-term picture for the housing market, with the sector having shown signs of slowly but surely returning to strength.
Fewer construction jobs
Despite the fact that construction firms are experiencing the fastest rebound in activity recorded since 2015, the sector continues to record a reduction in employment. The latest figures suggest that one in every three construction companies in the UK reduced its employment rate over the past month.
A similar proportion indicated that they expect to continue hiring fewer employees for at least the next year. Both the coronavirus crisis and Brexit are being blamed for making property developers and construction companies apprehensive about making major hiring decisions or committing to new projects.
Property capital gains tax
Last up, the Social Market Foundation (SMF) has suggested the introduction of a new “property capital gains tax” to help plug the UK’s growing budget deficit.
The move would see all homeowners face a 10% tax payment on the increase in value of their home from the time they bought it to the date of its subsequent sale. According to the SMF, this could generate in excess of £421 billion within the next three decades as property prices across the UK continue to skyrocket.
Does the Government’s Home Energy Upgrade Initiative Go Far Enough?
Despite the government’s recent decision to financially support homeowners and social landlords willing to conduct energy-efficient retrofits, the current measures simply do not go far enough. Worse still, social landlords who fail to take advantage of the offer at an early stage run the risk of missing out altogether.
The Chancellor recently confirmed the allocation of funding to the tune of more than £3 billion for ‘green job’ creation over the coming years. The vast majority of it was earmarked for private sector initiatives, including a new ‘Green Homes Grant’ worth £2 for every £1 landlords and owner occupiers spend on energy-efficient upgrades.
The funds would be available up to a maximum of £5,000 for most, increasing to £10,000 for low-income households. According to the official government statement, the initiative will benefit a minimum of 600,000 homes in England, potentially “saving households hundreds of pounds per year on their energy bills” as a result.
Though the Chartered Institute of Housing also warned that “social landlords who don’t act now could find themselves struggling to meet a target because they haven’t given it the priority it deserves,”
Right incentive, wrong time?
On one hand, some argue that mathematics works and should therefore be taken advantage of. Where relatively basic home improvements like cavity wall insulation or loft insulation are concerned, a contribution of £2 from the government for every £1 spent seems pretty generous. especially when considering the ongoing benefits of energy efficiency, for example, reduced energy bills.
The problem is that, as it stands, there’s no real certainty whether homeowners or landlords will have the confidence right now to fork out for any kind of major home improvements. As the vast majority of households are still reeling from the financial impact of the COVID-19 crisis, it seems likely that the incentive will expire before most are able to take full advantage of it.
Redistribution of funding
Experts at the Chartered Institute of Housing believe it may be necessary for the allocation of the full £3.8bn Social Housing Decarbonisation Fund to be modified in order for the initiative to have the desired effect. One of the ideas floated by the institute is that of zero-interest loans for the private sector, where major updates and improvements are required.
They also believe that local authorities should have more of a say in how the funds are allocated and spent.
“There’s a case for local authorities and possibly housing associations to lead the way in the private sector—for example, by retrofitting Right to Buy properties on estates or tackling all the homes in fuel-poor neighbourhoods,” suggests the Chartered Institute of Housing.
In the meantime, the Institute also advises landlords to make full use of the initiative at the earliest possible stage, rather than delaying their decisions to act for too long.
“As well as considering whether to bid for money from the pilot scheme, they (landlords) shouldn’t delay in assessing their stock in detail to establish how much retrofit will cost and where the biggest challenges are.”
“Some landlords are already doing this, but those who don’t are taking a risk. Not only might they miss out on funding, but they could find themselves struggling to meet a target because they haven’t given it the priority it deserves.”
House Prices for July Hit a New Record High
The UK’s property market is bouncing back at a rate few could have predicted, with the easing of lockdown restrictions having a knock-on effect on property prices across the country. According to the latest figures published by Halifax, average house prices for July reached a new record high—a full 1.7% increase on the previous month.
The Halifax House Price Index showed an average property price for July of £241,604, compared to the £237,834 average recorded in June. This would also mean that average property prices for July were up an impressive 3.8% on the same months in 2019.
According to Russell Galley, managing director of Halifax, the sudden spike is indicative of a pent-up wave of demand being released in the wake of eased lockdown restrictions. In addition, the chancellor’s recent introduction of a temporary ‘stamp duty holiday’ is also credited with motivating sellers and buyers to take action.
Until March next year, the threshold at which homebuyers will be required to pay stamp duty has been increased to £500,000 in England and Northern Ireland. an increase that, according to the government, will significantly benefit at least 90% of all buyers during this time period.
Indefinite uncertainty
Mr. Galley stated that while an increase in activity had been expected as lockdown restrictions were eased, none had predicted such a dramatic spike.
“The latest data adds to the emerging view that the market is experiencing a surprising spike post-lockdown,” he said.
However, he also went on to warn that while things are starting to look better for the housing market, the sector must be braced for a period of on-going and potentially indefinite uncertainty.
“As government support measures come to an end, the resulting impact on the macroeconomic environment, and in turn the housing market, will start to become more apparent,” he said.
Along with the long-term fallout of the COVID-19 crisis, the real estate sector in the United Kingdom is widely expected to be negatively impacted by Brexit. Particularly if the United Kingdom leaves the European Union without a deal—a prospect that is becoming increasingly likely—the repercussions for the UK economy as a whole could be devastating.
Short-Term Holiday Lets Increase in Demand as Lenders Diversify Mortgage Options
Staycation spots are on the rise in the United Kingdom, and mortgage lenders are making their best attempts to meet the rising demand for them.
Do you think short-term lets are the new direction property lenders and investors should be eyeing for the next couple of years?
Before the onset of Covid-19, the UK holiday market was thriving in the face of world competition. British locals, along with foreigners, were taking advantage of the depreciating pound rate and booking more staycations than in previous years.
From a consumer’s perspective, environmental issues have become an important aspect when choosing a holiday destination. Research shows that a significant percentage of people are on a lookout for ‘more sustainable’ or ‘greener’ holidays in the future.
From the angle of a property investor, many factors such as long-term rentals and short-term lets, can motivate landlords to diversify their ownerships. The latter carry tax and financial benefits, including increasing demand from consumers and a more attractive business model for higher profit margins.
The outbreak of Covid-19 has restricted international travel, resulting in a rise in demand for staycations. While people are reluctant to go abroad for travel, they are on the lookout for closer and cheaper alternatives: A trend that is likely to survive until the virus subsides completely.
A number of Adapting to the times and new trends, mortgage lenders are giving more opportunities to borrowers. A number of companies such as YBS Commercial Mortgages and Teachers Building Society have attempted to profit off and open the market for staycations. YBS, for example, is now offering a buy-to-let product that targets holiday lets in the UK’s top tourist sites. The offer comprises a loan amount of £1m and the opportunity for a five-year fixed rate at 3.85% with a loan-to-value (LTV) ratio of 75%. Work out what a mortgage would cost you using our Mortgage Calculator UK.
On the other hand, Teachers Building Society has launched some products in which the lender offers a 3.49% three-year fixed rate and a 3.74% five-year fixed rate with a 75% LTV for borrowers. These products aim to meet the demands of new and pre-existing property investors.
Diversifying short-term lets is also imperative to its specific location along with the property on the market. Many believe that coastal resorts are a great option as these tend to be the most popular summer holiday destinations. However, seasonal-prone areas may not be the best choice when it comes to staycation lets.
One of the primary locations in the UK with the highest short-term let yields is Liverpool. Research shows that such city locations remain busy all year round, attracting business ventures and tourists. Most cities are geared up for hosting and attracting major sporting events, which automatically pulls people closer to the location. As mainland cities such as these have ideal transport links, restaurants and cafes, tourist sites, and employment hubs, they will continue to attract more people.
As the market trends continue to shift, the opportunities for lenders and borrowers alter as well. It is interesting to note how short-term lets thrive in the market, and if they will break traditional long-term rentals.
Judge Declares DSS Exclusions by Private Landlords ‘Unlawful’
For the first time, a judge in the United Kingdom has ruled that the exclusion of people on housing benefit by private landlords is discriminatory and unlawful. The court ruling was heralded as “momentous” by those campaigning for change, following a complex legal battle involving a single mother-of-two made homeless due to the discriminatory policies of a letting agent.
In an interview with BBC News, the woman (whose identity remains protected) explained that after being evicted by her landlord on the basis of a “no fault” eviction, subsequent agents were unwilling to consider her case.
“I was shocked and found it very unfair that they wouldn’t even give me a chance,” she said.
“I had excellent references from both my landlords of the last nine years as I’ve always paid my rent on time and I had a professional guarantor,”
“I could have paid up to six months’ rent in advance because my parents lent me the amount,”
“When the letting agent wouldn’t take me because of a company policy, I felt offended that after all those years when I have prided myself on paying my rent, paying my bills, being a good tenant, it just meant nothing,”
“When I realised I was going to be homeless because I couldn’t find anywhere, I felt sick to my stomach.”
Her case was subsequently taken on by housing charity Shelter, which has assisted hundreds of people faced with similar discrimination. Simply because she was on housing benefits, the mother of two was considered unsuitable for private property rental and subsequently rendered homeless.
A victory for common sense
Her case was ultimately heard by District Judge Victoria Mark in York County Court, who went on to reach the landmark ruling on July 1.
“Rejecting tenancy applications because the applicant is in receipt of housing benefit was unlawfully discriminating on the grounds of sex and disability,” was the ruling of the judge, meaning that the individual’s exclusion directly contravened the Equality Act 2010.
Speaking on behalf of Shelter, chief executive Polly Neate welcomed the ruling and suggested that it may pave the way for a more inclusive future for the private rentals market.
“This momentous ruling should be the nail in the coffin for ‘No DSS’ discrimination,” she said.
“It will help give security and stability to people who unfairly struggle to find a place to live just because they receive housing benefit.”
Widespread discrimination
Evidence suggests that the vast majority of DSS tenants fulfil their financial obligations and care for their rented properties no differently than non-DSS tenants. However, a survey conducted on behalf of Shelter suggested that at least two-thirds of private landlords in the UK discriminate against those on housing benefits.
“This is the first time a court has fully considered a case like this,” commented Shelter solicitor Rose Arnall.
“It finally clarifies that discriminating against people in need of housing benefits is not just morally wrong, it is against the law,”
“This sends a huge signal to letting agents and landlords that they must end these practices and do so immediately.”
Asking Prices for Properties up £6,000 on Pre-Lockdown Averages
Lockdown has taken its toll on the UK’s housing market, but evidence would suggest things are gradually returning to normal, at least in terms of property values, which are heading in the right direction following an extensive period of stagnation.
According to the latest figures released by Rightmove, which is the UK’s leading online property portal, average house prices in England are up £6,000 on their pre-lockdown averages. These numbers suggest that the “flood of pent-up demand” predicted to hit the market as lockdown restrictions are eased may already be underway.
Hundreds of thousands of property transactions are known to have been put on hold during lockdown, and as of only a few weeks ago, these sales were once again allowed to proceed by the UK government.
An unprecedented, though expected, rush
Rightmove has noted that contact requests and general activity among buyers and sellers not only improved but actually surpassed all previous daily records when the market officially reopened.
“The surprise reopening of the market with only a few hours’ notice meant many estate agents were not ready for the sudden rush of buyers,” the property portal reported.
Rightmove also stated that the ten busiest days in the history of its website were recorded during May and June 2020, with a cumulative on-page time of nearly 1 million hours on June 6 alone.
Helped by pent-up demand, sellers are gradually pushing average property prices upwards in key areas across the UK. This week, the average property price is approximately £6,000 higher than it was at the beginning of lockdown, which is an increase of approximately 1.9%.
The government had previously prohibited all house moves that were not considered essential, only allowing non-essential property transactions to take place as recently as mid-May.
Asking prices: predominantly paid
Another interesting finding from the report was that Rightmove revealed that a surprising proportion of buyers are demonstrating a willingness to pay almost full prices. Even in the midst of a period of economic uncertainty, the average homebuyer in June is negotiating a 2.3% discount, which is much better than the 3.4% recorded in February prior to the lockdown.
“England is getting moving again,” Rightmove reported.
“There are no signs of panic selling or even a price dip. On this evidence, buyers may now be trying to exchange quickly.”
Rightmove also confirmed a change in priority for the average UK home buyer, as homes with gardens now account for more property searches than ever before, and previous best performers such as studio flats have now fallen completely out of the top five.
Rightmove and other industry experts are advising would-be buyers and sellers to take advantage of the current situation.
UK Property Market Could Benefit from ‘Blockchain’ Style Platform
A software start-up in the UK has suggested that the speed of property sales nationwide could be doubled with the introduction of a new blockchain-style platform. Coadjute, the company behind the proposed ‘proptech’ platform, announced a deal this week that could put the software into increased use in the future.
If the initiative goes ahead over half of all estate agents in the UK would gain access to a new platform designed to accelerate property sales by addressing delays and inefficiencies.
Coadjute chief executive Dan Salmons told Yahoo Finance UK that a simple lack of streamlined data-sharing and real-time communication between people involved in property sales and purchases is the main reason transactions often take months to complete.
The company believes that its new platform could clear up confusion throughout all stages of the sale process, making it quick and easy to access important information. It would also eliminate unnecessary paperwork from the equation for both buyers and sellers.
Coadjute has stated that the UK government is on board with the idea, having indicated its enthusiasm about blockchain-style systems and similar platforms for the property industry.
Instant Access to Essential Information
The new system could potentially transform the way those involved in property transactions go about their business. The platform would serve as a centralized hub for storing, using and updating essential information in real-time, connecting lenders, estate agents, sellers, buyers, government offices etc.
Rather than having to reach out to third parties (as is often the case now), all the information needed to proceed to the next step in the transaction would be accessible in real-time.
According to Coadjute, this is far from the first time the industry has been presented with the idea of unifying its data access and management protocols with a single software platform. All previous attempts have failed due to the difficulties involved in creating a platform all parties are happy with in terms of user-friendliness and safety.
In addition, many are simply reluctant to switch from traditional manual processes to a system of centralized and automated data processing.
An Alternative Approach
What gives Coadjute’s the edge in its proposal is the way it eliminates the requirement for the parties involved to sign up to a single IT system. Instead, estate agents and other parties would be able to continue using their own software and follow their own Data Storage and security practices.
They would simply connect to a shared centralized data hub, which would contain all the information that would normally be needed to be sourced manually. Actions and activities would be tracked, in order to let those accessing the data to note important changes, along with when they occurred and who implemented them.