Hatch Brenner Solicitors Property legal team includes Residential Property and Commercial Property specialists. With a very buoyant property market currently, the team have taken time out to analyse what might be happening for now and into 2021, and provide their reflections below.
How will the COVID-19 pandemic and Brexit impact the property market?
The impact of the COVID-19 pandemic, together with the UK leaving the European Union, has led to many in the property sector projecting that house prices will fall in a number of regions in 2021. With house prices increasing in recent months, the most accurate prediction for the overall UK market is that the property market will remain flat at 0.0%. However, this is dependent upon there being an EU trade deal in place, a vaccine being available and dispensed out, and no further major lockdowns.
The impact of Coronavirus
The impact of coronavirus on the housing market in the last nine months has in fact seen a growth. The Stamp Duty Holiday incentive introduced by the UK Government has encouraged house sales and allowed the economy in this respect to remain somewhat stable and resilient. The ability to work from home during the pandemic and workplaces adapting to the changes through encouraging working from home has enabled a perception change in individuals investing in better facilities within their homes.
The geographical changes in the property market predicts a 1% fall in house prices in London in 2021 as many consider relocating to more rural locations. This follows the 2.5% increase in house prices in London in 2020. The number of transactions overall recorded by HM Revenue and Customs in October 2020 was 105,630, being the highest recorded in a single month since 2016. The potential saving of up to £15,000 in tax on a £500,000 property with the Stamp Duty Holiday has seen a mini boom in the property market.
The impact of Brexit
The withdrawal of the UK from the EU with the end of the transition period nearing will inevitably impact the stability of the property market. The sourcing of raw materials for construction has been impacted by COVID-19 and further difficulties will be presented should the transition period end without a deal between the UK and the EU in place.
House prices have stagnated following the EU referendum in June 2016. However, this pattern is common for that time of year with house prices generally growing in a sprint and then plateauing over the following few months, as subsequently seen in 2017. The uncertainty regarding what the impact on house prices will be following the end of the Brexit transition period originates to 2016 when the EU referendum itself did not have much impact on transaction figures.
As economic uncertainty grew in late 2018 and early 2019, house prices began to fall quite quickly before rising steadily over the months leading up to the general election in December. In identifying a trend in the housing market, a delayed one, if any, is determined.
The data available for this year is limited with the Land Registry gradually catching up with house price reports following their pause with the national lockdowns from the COVID outbreak.
The current demand in the property market is causing house prices to be pushed up by 2-3% which is driven partly by the stamp duty savings, the fear of Brexit and the lower mortgage rates available. With the Brexit transition period looming and soon to be followed by the Stamp Duty Holiday ending in April 2021, the uncertainty of the impact this will have on the housing market grows. With people prioritising investment into their homes, perhaps the demand will remain for specific property types by geographical location. The changes are ones to watch …
Please contact the Hatch Brenner Property team via 01603 660 811 or email email@example.com to speak to a residential or commercial property specialist.