With Easter behind us, spring is most definitely here. In the housing market, traditionally spring tends to consist of some of the busiest months of the year. However, with the SDLT holiday and other land tax holidays around the UK, the period leading up to Easter has been incredibly busy.
So busy in fact that many conveyancers expressed a wish for things to cool down a little, at least enough for them to catch their breath and regroup. This has led to many firms reporting that they, due to unprecedented demand, have stopped taking on new conveyancing work to ensure they keep offering a high quality service to their clients.
To put this into context, according to HMRC data, February 2021 saw the highest in-month transaction volumes in a decade, a staggering 48.5% higher than volumes reported in February 2020. No wonder conveyancers are feeling a bit stressed at the moment. Source: https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above/uk-monthly-property-transactions-commentary
Could this indicate a subdued spring is on the cards?
Will the current level of transactions continue?
Before the announcements of SDLT and LTT extensions in England, Northern Ireland, and Wales many industry professionals predicted or feared that there would be a devastating cliff-edge coming in April when the holidays expired.
Interestingly, Scotland chose to not extend their LBTT holiday, which ended on the 1st of April.
With the extensions being in place should we expect things to slow down in those markets?
Data indicate no signs of a slowing property market
Rightmove are reporting strong numbers on the housing market at the end of March;
- They reported the highest daily number of new properties coming up for sale - indicating continued strong supply
- They also report that they saw the largest number of sales agreed in a single day in the last 10 years on the 23rd of March
- A record of 9.1mn site visits was reported in a single day showing strong buyer demand
We can also see similar trends here at InTouch with the number of new matters opened and the number of completions continuing to be very strong throughout March. This is further backed up with anecdotal evidence speaking to our existing and new customers which are all still experiencing incredible demand, and some turning away business.
What is driving the continued boom in the property market?
The property market is complex and there are a whole host of factors influencing the boom, but there are some initiatives and changes which have had an impact and are worth mentioning.
Without a doubt, the land tax holidays are one factor, but not the only one. Other factors which are likely to impact are the government's initiatives to help first-time buyers. This includes the introduction of the non-UK resident surcharge, read more here, but also the 5% Loan-to-Value mortgage guarantee scheme.
2021 UK Mortgage Guarantee Scheme
The latter is designed to increase the amount of 5% mortgage products in the market which is used heavily by first-time buyers. The pandemic saw a lot of lenders withdrawing these products due to the uncertainty in the market, the scheme should allow more lenders to offer these products again making housing more affordable for new home buyers. To qualify for the scheme the price of the property needs to be a maximum of £600,000, and can be offered to non first-time buyers as well but not for non-residential, second homes, or buy-to-let purchases. With 5% LTV products coming back into the market you can expect demand to be boosted by buyers previously priced out.
Changing Living Requirements
The pandemic has had many of us reassess where we want to live, especially so as many firms elect to offer their employees more flexibility in where they work from. According to Rightmove, many are searching for additional room to work from home and outside space. Personally, I have multiple friends who have elected to move out of London for these reasons. A longer commute doesn’t seem that bad if it is only a few days a week. This means both strong demand and supply as people relocate.
The impact of the pandemic still shows when looking at the HMRC transaction volumes over the last 12 months, with overall volumes down. This is largely due to only a very small amount of transactions taking place during the first lockdown in 2020, meaning there is likely still a level of pent-up demand driving the market.
What Does This Mean for Conveyancers?
The data from Rightmove indicate that conveyancers will continue to have a busy couple of months ahead of them as both supply and demand remain high.
So for those of you who were looking for a calm period after the last couple of months' frenzy might find yourselves out of luck. But in the end, a healthy property market is good business so I am sure that people will be able to cope. Just make sure you balance the workloads of you and your teams so that you can continue to deliver exceptional service to your clients.
Are the changing SDLT, LTT, and LBTT rates making you confused?
We have made available a tool for just this purpose on our website to help calculate SDLT amounts for residential properties across all the four UK home nations. Easily showing amounts with the various holiday rates applied. You can find it here.