With Christmas and the New Year fast approaching and the usual administrative adjournments that brings, there is increasing pressure in the UK property market to finalise housing purchases before the stamp duty holiday ends on the 31st March. As a result of the reduced rates for buyers the market has seen a rapid increase in demand for housing and has put huge strain on property consultants, solicitors and public bodies causing a huge backlog of unsold houses in the market (a logjam). According to property consultants TwentyCi, there are 518,000 homes with sales agreed that haven’t been processed – 140,000 more than this time last year. The unpredicted upsurge in demand and logjam has brought a lot more uncertainty to the rental market which very few mainstream media outlets have been reporting on.
With sales agreed many homeowners have moved out of their homes and have been forced to rent until their proposed move is complete with Introducer Today reporting the average house purchase is taking up to 12 weeks. As most wouldn’t have foreseen the severity of the delays across the board from lenders to solicitors, they’ve opted for more immediate, short-term rental accommodation through sites like Airbnb, with the Telegraph reporting Brits paying thousands to put themselves up – unknowing of when they’ll actually be able to move to their new homes. This, combined with renters looking to jump on the property ladder during the stamp duty holiday, has surely played a part in the 5.3% drop in homes let in the UK between May and September this year in comparison to statistics recorded for 2019 by Hamptons.
Having said this, it’s not all cause for concern for landlords with quite a lot of things to look forward to. Whilst there are so many people rushing to buy properties, house prices have significantly increased with the ONS reporting that on average home values are up £11,000 in September compared to the previous year, meaning they have a lot more wealth to play with. In addition to this, as the end of the stamp duty holiday rears its head many prospective buyers are likely to miss the boat due to the logjam and in the long-term this will force many to enter back into the rental market. It’s important to note that we are also yet to see the effects of the end of the eviction ban which, whilst it was discontinued in the back-end of September, governments had asked bailiffs to not evict tenants from December-January as part of a ‘Christmas Truce’, so once we enter 2021 this end should bring some more freedom and fluidity back to the market.
The primary issue which has been highlighted by the logjam is the serious need to digitise. Public bodies and organisations such as the HM Land Registry have been completely washed out by the demand created. Property data engineers Search Acumen have slammed ‘age-old processes’ exposed by covid-19 for delaying property searches and worsening the logjam, they have called on the government to properly invest in the digitisation programme. Whilst this has negated some of the effects of the stamp duty holiday, it has showcased the opportunities that digitisation will bring and how it can help accelerate and improve the real estate market as a whole. Virtual consultations and viewings permit wider engagement as not all potential renters are flexible to come visit a property, this can also stimulate growth overseas as they can view accommodation as if they were actually at the property. Moreover, with digitisation landlords can maintain contacts online, making it easier to communicate and to advertise relevant content to clients they have previously dealt with, as well as allowing for more time for personal customer service. The logjam has only added to the case for more focus on technology and has forced a lot of landlords to adapt.
Without a doubt the stamp duty holiday has had an important impact on the property market with many positives to take away which will be a lot more visible when it comes to an end on March 31st. Whilst it hasn’t been too kind to the majority of landlords in the rental market who have seen a fall in homes let, landlords who offer short-term accommodation have been able to take advantage of the logjam caused by the stamp duty holiday and it has forced the rest to digitise more with things like virtual viewings which will only optimize the transaction process and help the market expand. This has also put the spotlight on public bodies crying out for government investment in digitisation to improve outdated processes which will accelerate the market further. All in all the rental market is likely to balance out again come April as many prospective buyers will be unable to purchase homes without the break in tax and by this stage at the very least as a whole landlords, agencies and public bodies should be a lot more digitised and enhanced.