Sarah Cowley, Partner and Head of Coodes Solicitors’ Residential Property team, reflects on the impact of Covid-19 on the property market.
This has been such an extraordinary year for conveyancers. Back in March and April, there was a fear the property market could grind to a halt, but now many agents and other property experts are predicting that 2020 will far exceed expectations.
Here at Coodes, it is an extremely busy time for our Residential Property team. In September, we provided double the number of quotes for our conveyancing services compared with July.
We are continuing to handle an unusually high number of conveyancing matters. We have 21 experienced lawyers in the team so are able to meet a high demand, however, have capped their workloads to ensure we continue to offer the best service in the face of such unprecedented interest.
There is also demand for our specialist conveyancing work, including transfers of equity, adverse possession, lease extension and equity release.
In the early weeks of lockdown, we saw a drop in some of our usual work, including a significant reduction in the number of first time buyers. However, we are now handling our usual mix of conveyancing matters, including affordable housing, as well as high value purchases. We are also taking high numbers of enquires from local people as well as those seeking to relocate from outside the region.
In other words, all kinds of people are now trying to move into all kinds of properties.
Why are so many people moving?
There are many reasons why more people are now seeking to move. With property sales and purchases effectively on hold in the early weeks of lockdown, there is an element of pent-up demand as those affected are now able to progress with their plans. But this is not by any means the only factor.
The shift to homeworking
There has been much discussion around how this pandemic could change our lives in the longer-term. One huge shift is the move to homeworking for many people. Nearly a quarter (24 percent) of people surveyed by the Office of National Statistics (ONS) in October said they had worked exclusively at home in the last week.
Those who no longer need to commute into work each day could have more choice over where they live. It may also cause people to look for larger properties with suitable office space.
A new lifestyle
As people reflect on the last few months, many may now be looking for a lifestyle change, including a new home in a different location. Data from the ONS in June suggested that 28 percent of adults were planning to change their relationship, job or home after the crisis. Covid-19 has been a prompt for many people to reassess their lives and make big changes.
Research from a number of companies, including Rightmove and Savills, has indicated that one effect of the pandemic will be for more people to want to move from the cities to more rural settings.
In the early weeks of lockdown, Coodes had a surge of conveyancing enquiries from people looking to relocate to Cornwall or Devon. These calls are still coming in, although they are now more balanced with enquiries from local clients. And speaking to professionals in other parts of the UK suggests that it is not just rural locations in the South West which are experiencing high demand for conveyancing.
The SDLT holiday deadline
The Government introduced the Stamp Duty Land Tax (SDLT) holiday in July to kick start the property market. The legislation gives most homebuyers a considerable saving on their property purchase. This certainly seems to have had the intended effect and has incentivised many of our clients to move.
The SDLT holiday is due to finish on 31 March 2021 so, with the average purchase currently taking up to 20 weeks, the clock is ticking. People are now keen to complete on a purchase as soon as possible and many homes are being snapped up very quickly after being advertised.
The effect of Covid-19 on buy-to-let
The buy-to-let market is also currently busy, with many people seeking to purchase second homes. The SDLT holiday may be having some effect here too. Although second home owners need to pay stamp duty, it is a lower rate until the end of March.
We are aware that rental properties are currently in very high demand. While we are not sure of the exact reasons for this, it may partly be the result of some people being forced to sell their property as a result of their income being affected by the crisis.
What will be the long-term effect of the pandemic on the property market?
This is a complex situation and we don’t yet know what the longer-term impact of the crisis might be. The end of the SDLT holiday in March could cause the market to slow down, but this remains to be seen.
The end of the Job Retention Scheme this month could sadly lead to some redundancies, though its impact may be reduced with the launch of the Job Support Scheme. If we do see job losses, then this will undoubtedly affect the property market.
In terms of property valuations, prices have increased by five percent in the last month – the highest increase since Autumn 2016. With valuations largely based on sales of similar properties, this could mean prices remain inflated.
According to Nationwide, mortgage approvals rose from around 66,000 in July to 85,000 in August. The recent announcement of the return of the five percent mortgage could mean we see more people able to get onto the property market and an increase in purchases from first time buyers. It will be very interesting to see what difference this makes to the market in the months and years ahead.
While the future remains uncertain, the property market is currently extremely buoyant. We are committed to helping our clients achieve their goal of moving.
For further advice on buying or selling a house, please contact Sarah Cowley on 0800 328 3282 or email@example.com.