Property Investment in 2021
It’s safe to say that there has never before been a year like 2020. It seemed like there was no end in sight to the unfolding developments that threw businesses into turmoil and caught consumers and investors completely off guard. That said, the Covid-19 pandemic is still an ongoing crisis that governments across the world are struggling to navigate.
A few months into 2021 however, and it appears as though we may soon be taking a few tentative steps towards post-Covid-19 recovery. As the UK prepares to emerge from under constraints of a strict lockdown, the rollout of the covid vaccines hopefully signifies the beginning of a transition back to normality.
But how should property investors be preparing for this “new normal”? Which asset classes are set for impressive performances over the coming 12 months and which may struggle to adapt to the post-Covid-19 era? Conveyancing Supermarket have made a round up of all the most recent property investment news so you don’t have to.
A Drastic Shift In How We Use Our Homes
In the past 12 months, we have drastically changed the way we use our homes. Many people have used this time to reassess what they want and need from their dwellings.
During the series of lockdown restrictions, everyone who was able to do so was urged to work from home, causing attitudes towards home-working to change. Many companies have also made announcements on working from home and flexible working for the future. Even as lockdown restrictions start to lift, we are likely to see a large number of professionals continue working remotely.
Also, with spending more time at home over the past year, this has caused us to reassess work-life balances. Many people have changed their priorities over allocation of space and location preferences.
Trends For Homebuyers And Tenants
Across the board, people are requiring more space. Home working and homeschooling has led to many people seeking dedicated space for an office or an extra bedroom. Many buyers and tenants have also been putting a garden or balcony higher up their list of priorities.
Top-speed broadband is also important as remote working becomes a longer-term option for many. Energy efficient properties and smart home technology are also other top priorities. Whilst these trends were, of course, already well underway before the COVID-19 pandemic, and they are now accelerating.
Build-to-rent developments in particular are adapting to what many people want from modern living. Many offer designated areas for home-working and provide high speed internet. Many new-build developments will also have better energy efficiency ratings and many developers are embracing advanced technology to entice new occupants.
In other news, the Law Society is set to pilot upfront conveyancers’ information for home buyers and sellers.
This will involve the TA6 form which contains crucial information relating to the sale, covering compliance with building and planning applications, the supply of services, flooding, and common parts shared with neighbours as well as information relating to Japanese Knotweed and septic tanks. The Law Society has also identified what it calls “key early marketing questions” that can be completed upfront in a transaction in what will be known as the TA6 Part 1.
Until now this information was only collated post-offer, after a solicitor had been instructed. This is another reason to compare and decide upon conveyancing solicitors and compare buy to let conveyancing fees as early as possible.
Stephanie Boyce, the president of the Law Society of England and Wales says:
“Technological change in the conveyancing market has accelerated as a result of the Covid-19 pandemic.”
“This project will continue that technological advancement and innovation, helping consumers, estate agents and solicitors to seamlessly collect key marketing information using the familiar, but wholly digitised TA6 workflow.
“The answers to the questions in the new TA6 Part 1 will help to inform a buyer’s decision to purchase and will support industry-wide initiatives to begin the systemic collection of up-front information about a property.
“We look forward to making the TA6 Part 1 available to our network of forms’ licensees and solicitors following the conclusion of the pilot and are hopeful it can assist in reducing the time it takes to achieve completion from the point of instruction, as well as supporting earlier instruction of a solicitor.”
Earlier in the year, Conveyancing Supermarket reported that the average price of residential property in the UK had experienced its highest level of growth seen since 2015, signifying a drastic end to the previous four years of property price stagnation. Annual house price growth rebounded to 6.9% from 6.4% in January, prices were up 0.7% month-on-month, more than erasing the small decline seen in January.
Looking ahead, can the UK property market maintain this momentum? Can investors enjoy another year of profit for property owners? Or could unforeseen developments knock the industry off course, reversing the gains seen last year?
In December, Rightmove predicted house price growth of 4% over the coming 12 months, citing the knock-on effects of lockdown as a motivator for prospective buyers. They claimed that UK homeowners would be desperate to move to larger properties after being housebound for so long, a trend that Rightmove believes will offset any negative market developments.
Whatever happens, there are still always risks involved. The market uncertainty in 2020 meant that many UK lenders withdrew their mortgage products and imposed strict loan application review processes. Consequently, many saw elongated mortgage deployment times, and even increased rates of rejection.
Those hoping to profit from any potential 2021 UK property price growth would do well to seek out alternative lenders with in-house credit lines to ensure they can easily close on transactions. Unless traditional lenders successfully adapt to the new normal soon, I can only foresee this trend continuing.
Life Under Lockdown
Being stuck at home during several lockdowns has meant spending more time at home, keeping busy around the house; whether that’s by cleaning everything from top to bottom, or making room to work from home
If you’re on a roll with organising the home, you might be looking for new home storage hacks, ideas and buys to help streamline your space; and investing in some new home storage solutions could be the answer. Using a self storage unit means you’re able to pack away some lesser used items without getting rid of them. By packing away and clearing your home of these items now, you’re not only making your home feel more spacious and desirable you’re also doing some of the packing in advance should you also be moving soon.
SDLT Changing Soon
One of the reasons so many people were eager to purchase property last year was due to the stamp duty land tax (SDLT) holiday, which allowed them to knock up to £15,000 off the SDLT fee on any given property transaction.
This policy is now due to end at the end of June 2021. Property professionals and commentators alike are expecting a continued demand for property before this date; Investors eager to capitalise on future UK property price growth and avoid the additional SDLT tax that property transactions after this deadline will incur.
For overseas buyers and investors, the incentive to complete on property transactions is doubly important due to another upcoming change to SDLT: the 2% overseas-buyer surcharge. This new policy, due to be implemented on 1 April, will impose an additional 2% tax on property purchases for buyers who aren’t already UK residents. The difference in potential SDLT bills on these transactions will be substantial meaning that a rush to finish such transactions soon is expected. Compare conveyancing solicitors now and don’t miss out on these deadlines.