New 95% Mortgage Scheme Launches

The new government-backed 95% mortgage scheme launched on 19 April 2021.  High street lenders including Lloyds, Santander, Barclays, HSBC, and NatWest have all signed up to the scheme.  OGR Stock Denton’s residential conveyancing team are highly respected panel members on all four aforementioned lenders.

With studies showing that 80% of renters are now actively saving for a deposit, the ability to borrow up to 95% of the value on a property will ensure more people realise their dream of owning their own home.

How does the 95% mortgage scheme work?

With rents rising every year, the challenge to getting a foot on the property ladder is saving the necessary deposit.  During the Coronavirus pandemic, 95% mortgages virtually disappeared, putting a further barrier between Generation Rent and their desire for homeownership.  At the most recent Conservative Party Conference Boris Johnson made a promise to tackle inequality in the housing market.  By providing a government-backed low deposit scheme for properties purchased for £600,000 or less, thousands more will be collecting keys from an estate agent between April and when the scheme closes in December 2021.

Susan Allen, CEO of Retail and Business Banking at Santander gave her backing to the scheme, stating:

“We know that raising a large deposit can often be challenging for potential home buyers, so we’re pleased to be part of the government’s Mortgage Guarantee Scheme offering a range of 95% mortgages to help both first-time buyers and home movers.

As one of the UK’s largest mortgage lenders we see how important homeownership is to our customers and we use our wide experience and expertise to support them throughout the home buying process.”

How OGR Stock Denton’s Conveyancing Lawyers can help you with the 95% government-backed mortgage scheme

 With years of experience in the residential property market, our Residential Conveyancing Solicitors will ensure your 95% mortgage application and property purchase transaction goes through smoothly.  You can be confident that we will apply for all the necessary property searches and carefully examine the title and explain any issues that may affect your future enjoyment of the property.  As a full-service law firm, we can also assist you with other legal issues relating to your new home, for example drafting a Will or a Pre or Post-Nuptial Agreement.

Reacting to the news that the 95% mortgage lending scheme has been launched, Michael Stock, who heads up our Property Department comments:

“The Government’s Mortgage Guarantee Scheme will provide the boost many prospective home-buyers need to get on the property ladder.  However, no property acquisition is without risk.  It is essential to have an experienced Conveyancing Solicitor examine the mortgage offer and the details of the property to ensure the risk of falling into negative equity is mitigated.  Most of our clients and their families remain with us long-term because they appreciate that we take the time to get to know them and trust that they will be swiftly notified regarding any concerns around their property purchases.”

Whether you are buying a pre-existing home or a new build, our North London based Property Lawyers will provide expert advice and ensure your interests are fully protected.

To make an appointment to discuss any aspect of residential property law please email or phone 020 8349 0321.

 

What The 2021 Budget Means For Homebuyers, Employers, and Investors?

On 3 March 2021, Chancellor Rishi Sunak delivered this year’s budget. A year ago, two weeks before the first Coronavirus lockdown, the Conservative Party was promising to spend enormous sums in order to ‘level up’ and reward the so called ‘red-wall’ voters. Then everything changed almost overnight, and most of the money set aside for infrastructure spending etc was diverted into saving the economy, people’s jobs, and the NHS. This year’s budget was about continuing to provide Coronavirus support and paying for the mountain of debt accrued in fighting the pandemic. However, given the circumstances the country (and the world) are in, there was some surprisingly good news from the Treasury.

Residential Property Solicitors in London can help more people buy their home

Those looking to purchase a home have been given a double-shot of good news. Not only is the Stamp Duty Land Tax (SDLT) holiday being extended to the end of June, first home buyers are also set to benefit from a government-backed low deposit mortgage scheme.

Stamp Duty Land Tax

Introduced in July 2020 to help the residential property market recover after it came to a virtual standstill in the first lockdown, the SDLT raised the tax-free threshold to £500,000. This meant most homebuyers have not had to pay SDLT when buying a new home, saving them thousands of pounds. There was concern that the property market would fall off a cliff-edge if the tax break was abruptly ended on 31 March, as many transactions would not have completed, leading to buyers pulling out of sales as they would not be able to afford to pay SDLT. Thankfully, the Chancellor announced that the tax-free threshold would remain until 30 June 2021. From 30 June to the end of September 2021, the nil rate band will be set at £250,000 – double its standard level.

Low-deposit mortgages

Low-deposit mortgages have essentially disappeared over the last 12 months (although the number of lenders offering them has been declining since the 2008 financial crisis). This has made it almost impossible for first-time buyers, especially in London and the South-East, to save enough for a minimum 10% deposit. The government has said it is determined to turn ‘generation rent’ into ‘generation buy’.

To help all home buyers (not just those trying to get on the property ladder), the Chancellor confirmed that:

“several of the country’s largest lenders including Lloyds, Natwest, Santander, Barclays, and HSBC will be offering these 95% mortgages from next month.”  

Buyers will pay just 5% deposits to buy homes worth up to £600,000. The government will offer lenders a guarantee to provide mortgages covering the remaining 95%.

Businesses can continue to benefit from the Furlough Scheme

For both employers and employees, the Budget announcement that the Government’s Job Retention Scheme is being extended until September will be welcome. 

Speaking in the Commons, Mr Sunak said:

“As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July when we will ask for a small contribution of just 10% and 20% in August and September.”

Mr Sunak told the Commons: “As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July when we will ask for a small contribution of just 10% and 20% in August and September.”

Despite this positive news, there is likely to be redundancies when the Furlough Scheme does come to an end. For employees, this may mean seeking employment law advice on Settlement Agreements and whether they have a claim for unfair dismissal. Employers may need to see an employment lawyer for advice on ensuring the strict statutory redundancy process is correctly followed.

Inheritance Tax Solicitors can advise on the best estate planning strategies

For some, the budget did not bring good news. Although the Chancellor did not raise Income Tax, National Insurance, or VAT, a freeze was put on Inheritance Tax, pension ‘lifetime allowances’, and the personal tax allowance thresholds. As wages and the value of assets increase over the next few years, more people will be subject to increased taxes.

To protect your wealth, tax planning is essential. An Estate and Inheritance Tax Planning Solicitor will carefully evaluate your investments and advise on actions to take to avoid paying more tax than is necessary. Because the government’s need to repay the deficit will become more pressing over the coming years, it is vital to get your tax planning in order immediately.

To make an appointment to discuss any aspect of residential property, employment, or tax planning law please send us an email or phone 020 83490321.

UK Stamp Duty Holiday set to be extended?

It has been widely reported that the Chancellor of the Exchequer, Rishi Sunak is likely to extend the Stamp Duty Land Tax (SDLT) holiday for a further three months.  This will occur when he presents his budget on 3rd March 2021.

With the looming threat of over 200,000 current residential property transactions collapsing when the SDLT holiday ends on 31 March 2021, estate agents, solicitors, mortgage lenders, as well as buyers and sellers welcome the news of a possible extension.

Residential property solicitors in London are urging people not to make any financial commitments on the back of the reports that the SDLT holiday will be extended.  One thing that the Coronavirus pandemic has taught us is that government promises and policies can swiftly change.

In this article, we explain what stamp duty is and why not extending the holiday poses a serious risk to the property market.

What is Stamp Duty?

If you buy land above a certain price threshold in England or Northern Ireland, either freehold or leasehold, you may have to pay SDLT.  Scotland and Wales have different but equivalent taxes.

What is the Stamp Duty holiday?

During the first lockdown in March 2020, the residential property market virtually ground to a halt.  To help it recover, Rishi Sunak introduced a SDLT holiday, waiving the tax on the first £500,000 of the property price. 

SDLT over the first £500,000 is calculated as follows:

Property Value Stamp Duty Rate
£500,001 to £925,000 5%
£925,001 to £1.5 million 10%
above £1.5 million 12%

The above applies to people who are purchasing a property that will be their only home.

If you are purchasing an additional home, the SDLT rates up until 31 March 2021 are as follows:

Property Value Stamp Duty Rate
Up to £500,000 Up to 3%
£500,001 to £925,000 8%
£925,001 to £1.5 million 13%
above £1.5 million 15%

 

Why are residential property lawyers and estate agents so concerned about the end of the SDLT holiday?

There is pressure on the Treasury to extend the SDLT holiday in some form to avoid a ‘cliff-edge’ situation of thousands of house sales falling through because buyers cannot afford to pay normal stamp duty.

The time for a sale and purchase transaction to complete has become significantly longer due to the sheer number of house purchases and the fact that many organisations and businesses involved in real estate transactions have had staff off either sick or self-isolating.

Obtaining property searches is one of the main reasons for delays.  In December 2020, around 8% of local authorities were reporting significant delays in returning searches with turnaround times for all of these local authorities exceeding 26 working days.

There have also been major delays in processing mortgage applications.

A stable property market is essential to the UK economy.  Residential property represents the largest proportion of most people’s consumer wealth.  The Bank of England puts it succinctly:

“The housing market is closely linked to consumer spending. When house prices go up, homeowners become better off and feel more confident. Some people will borrow more against the value of their home, either to spend on goods and services, renovate their house, supplement their pension, or pay off other debt.

When house prices go down, homeowners risk that their house will be worth less than their outstanding mortgage.  People are therefore more likely to cut down on spending and hold off from making personal investments.”

Will the stamp duty holiday be extended?

The government has given no assurances that the SDLT holiday will be extended.  And even if it is, it may not continue in its current form, as doing so would merely ‘kick the can down the road’, leaving the property market vulnerable to another ‘cliff-edge’ in June.

To mitigate the risk of the property market plummeting, the Treasury may extend the holiday only to those who have reached a certain stage in their residential property transaction, for example, agreeing with solicitors to exchange contracts.  Alternatively, the tax relief available may be tapered down between March and June.

Either of the above scenarios will result in transactions becoming more complicated, and therefore, the Chancellor may decide on a blanket extension to the existing relief, taking a chance that the vaccine programme and easing of lockdown will boost confidence enough to ensure the market stays buoyant throughout the summer.

We will update you as soon as a decision is made. In the meantime, if you are concerned about your current house sale or purchase or want advice on how to take advantage of the SDLT holiday, please get in touch with a member of our conveyancing team today.

To make an appointment to discuss any aspect of residential property law please email or call us on 020 8349 0321.

Bank of Mum and Dad – Top three things to consider

The plight of young people trying to get on the housing ladder is well known. The days of being able to borrow 100% of the property price disappeared in the fog of the 2008/9 financial crisis.  Furthermore, the cost of housing has risen dramatically, increasing by 1,145% since 1980 and predicted to rise a further 17% over the next decade. London residential property solicitors are seeing more young people funding first home purchases through the ‘Bank of Mum and Dad’. 

But before handing over a significant sum to your children so they can purchase a property there are several things to consider to prevent a bitter family dispute developing in the future. For example, your son or daughter may be buying a property with their cohabiting partner. If their relationship ends, you may find it difficult to recoup your money if the loan and property purchase has not been structured to protect your interests as a lender.

The top three things to consider when lending or borrowing from the ‘Bank of Mum and Dad’ are:

Ask your property Solicitor to structure the loan to ensure you are repaid

If you have decided to lend rather than gift house deposit money, your residential conveyancing Solicitor will advise that you draw up a loan agreement detailing how the loan is to be repaid. You can also put a legal charge over the property in the same way a bank would if it were providing a mortgage. This will give you the power to sell the property (as a last resort) if your son or daughter and their partner do not repay you, provided there is sufficient equity in the property at the time of sale.

You may also choose to have your name registered on the property’s title, which would give you more control.  You and your child and their partner/spouse can purchase the property as tenants in common, with you holding a proportionate share of the property related to the size of the loan.  For example, as tenants in common, your son or daughter could hold 40% of the property, their partner 40% and you 20%.

If you are gifting the deposit money, make sure you understand the tax implications

You may choose to gift your children money for house deposits with no expectation of repayment. Whilst this is a wonderful gesture, it can have significant consequences in terms of tax. Inheritance Tax is payable if your estate is worth £325,000 after your death. Married couples can ‘inherit’ each other’s tax-free allowance, raising the amount to £650,000.  And if you leave your family home to your direct descendants, you can benefit from the Residence Nil Rate Tax Band of £175,000. 

You can give away £3,000 per year tax-free.  However, given that the average bank of mum and dad loan/gift is £24,100, rising to £31,000 in London, it is crucial to invest in estate/tax planning advice so you can gift house deposit money without incurring Inheritance Tax at a later date. Our private client team can work closely with your accountant to also plan for second-home Capital Gains Tax if you choose to own part of your child’s property as a tenant in common.

Have your property law Solicitor explain the legal implications of being a guarantor or taking out a joint mortgage

If you do not have the money available to gift or loan part or all of your children’s house deposits, you could consider being a guarantor on their mortgage.  Although fewer banks allow for guarantors these days, a mortgage broker will undoubtedly be able to find a willing lender. If you choose to be a guarantor, you must have the lending agreement checked by an experienced Conveyancing lawyer and ensure they fully explain the small print relating to your obligations to repay the mortgage if your child defaults on their mortgage payments.

You can also take out a joint mortgage with your child and their spouse/partner.  This will result in you owning part of the property.  Some banks will insist that you are aged under 70 at the end of the mortgage term and others will only provide a joint mortgage for interest-only loans.

Want to know more?  Come to our live webinar on How Secure Is The Bank Of Mum And Dad?

The above is simply a brief overview of the legal considerations and implications of the ‘Bank of Mum and Dad’. There are many other considerations such as whether or not a lending parent may have an interest in the property under trust law, Consumer Credit Act issues should the relationship between the parents and their child or their child’s partner break down, and allegations of undue influence in the case of a future dispute developing.

On Tuesday, 2nd March 2021, London-based property Solicitors from OGR Stock Denton LLP will be presenting a live webinar discussing all these matters and more. For further information please visit our events page.

What are Commercial Property landlords’ rights around recouping rent arrears?

The Coronavirus pandemic has hit many sectors such as hospitality, beauty, and retail with savage force.  Throughout 2020, attention has been focused mainly on the plight of tenants who have seen their customer footfall and/or turnover plummet.  However, many landlords are also struggling to cover their own financial commitments due to tenants being unable to pay rent.  Our North London commercial property solicitors regularly advise landlords who are treading a fine line between collecting rent to cover their liabilities and at the same time supporting tenants’ businesses to ensure investment properties remain occupied once the pandemic ends. 

If you and your team are preparing a strategy for collecting rent on the March quarter day, below are some answers to questions our commercial property solicitors are being asked by clients.

What are my legal rights regarding collecting rent from my commercial property tenants?

At present, commercial landlords are restricted regarding the legal actions they can take against a tenant who cannot or will not pay rent.  Until 31 March 2021 landlords cannot evict commercial tenants for rent arrears or use the Commercial Rent Arrears Recovery (CRAR) procedure unless an amount of 366 days’ rent is owing.  These restrictions have been in place since March 2020; however, when extending the restrictions in December 2020, the government made it clear that no further extensions would be announced:

Secretary of State for Housing Rt Hon Robert Jenrick MP said:

“I am extending protections from the threat of eviction for businesses unable to pay their rent until March 2021, taking the length of these measures to one year. This will help them recover from the impact of the pandemic and plan for the future.

“This support is for the businesses struggling the most during the pandemic, such as those in hospitality – however, those that are able to pay their rent should do so.

“We are witnessing a profound adjustment in commercial property. It is critical that landlords and tenants across the country use the coming months to reach agreements on rent wherever possible and enable viable businesses to continue to operate.”

Restrictions on insolvency measures including statutory demands and winding up petitions have also been extended until the end of March.

If I cannot evict a commercial tenant or take legal action for payment of rent arrears, what are my options?

In June 2020, the government published a code of practice for commercial landlords and tenants.  The voluntary Code is designed to “support businesses to come together to negotiate affordable rental agreements. It builds upon the discussions already taking place by giving those tenants and landlords affected by the crisis the tools to come to a mutually beneficial agreement; ensuring that best practice becomes common practice.”

The Code asks both landlords and tenants to be flexible, act in good faith, and support the long-term viability of businesses and the jobs they provide.  For example, tenants who are seeking concessions must be transparent as to why such concessions are required and provide relevant financial information to the landlord if requested.  In turn, landlords should provide concessions where they can, considering their own fiduciary duties and financial commitments.  If a landlord refuses to allow requested concessions, they/it should give reasons for doing so. 

In another example of mutual support, landlords can elect to reduce service charges during lockdowns when a premise is not occupied.  And in return, tenants can agree to pay additional service costs to fund Coronavirus-related health and safety requirements that landlords are required to comply with. 

Specialist Landlord and Tenant Solicitors in North London

Both landlords and tenants are being asked to ‘share the pain’ during the pandemic and co-operation will be needed for many months to come.  A commercial property solicitor can advise you on your rights as a landlord under the existing commercial lease agreement.  They can also assist you with re-negotiating terms per the principles of the government’s Code of Practice.

For further advice please get in touch with one of our North London Commercial property solicitors by email or on 020 8349 0321.

Webinar – How secure is the Bank of Mum and Dad?

OGR Stock Denton LLP would like to invite you to join our live webinar – How secure is the Bank of Mum and Dad?

1.00pm, Tuesday 2nd March 2021

Zoom webinars

With the introduction of the Stamp Duty Land Tax (SDLT) holiday in England & Wales there has been a surge of applicants borrowing money from their parents to purchase either their first and second home

This webinar will look at the legal and tax implications of parents lending money to their children to purchase a home, particularly where spouses and cohabitees are involved, including some recent case examples of how we helped clients in similar situations.

If you would like to join this webinar, please email Ali Kabani:

akabani@ogrstockdenton.com

 020 8349 5514

Combustible cladding ban set to effect all houses over four stories

The UK government is putting out consultation plans to ban combustible cladding on all residential buildings with four or more stories.  This follows a 2018 snap ban on putting combustible materials in cladding systems for buildings over 18m tall, a move that many of London’s best property solicitors supported following the Grenfell Tower tragedy.

Speaking in Parliament on 20 January 2021, Housing Secretary Robert Jenrick issued a dire warning to building owners that the government would start naming those who had not started work to remove unsafe Aluminium Composite Material (ACM) cladding from their buildings.

Housing Secretary Rt Hon Robert Jenrick MP said:

“The government is committed to bringing about the biggest change in building safety for a generation.

“Progress on improving building safety needs to move significantly faster to ensure people are safe in their homes and building owners are held to account.

“That’s why today I’m announcing a major package of reforms, including establishing the Building Safety Regulator within the Health and Safety Executive to oversee the new regime and publishing consolidated guidance for building owners.

“Unless swift progress is seen in the coming weeks, I will publicly name building owners where action to remediate unsafe ACM cladding has not started. There can be no more excuses for delay, I’m demanding immediate action.”

In addition to the consultation plans, the Minister also announced:

  • As mentioned in the Minister’s comment above, a Building Safety Regulator would be established immediately in shadow form before being fully created by legislation. The Health and Safety Executive (HSE) has been asked by the government to establish a Building Safety Regulator.  It will be responsible for overseeing building standards, including a more robust regime for high-risk buildings. Dame Judith Hackett will preside over the creation of the new regulatory body.
  • The government-appointed independent expert advisory panel (IEAP) has clarified and updated advice to building owners regarding the safety measures that must be implemented and emphasised the focus should be on cladding. The advice makes it clear that building owners must address safety issues on residential buildings 18m or under.  AMC and other metal composites with an unmodified polyethylene core must not be used on any residential buildings of any height and removed from existing structures.
  • A construction expert will be appointed to review AMC cladding remediation timescales and identify how the process can be sped up. To remove the barrier of costs, a factor which has seen many property litigation lawyers managing disputes between building owners and leaseholders/tenants or building owners and local authorities, the government is examining options to mitigate costs and provide alternative financing pathways to the already existing £1.6bn Building Safety Programme.
  • The proposed height threshold for sprinkler system requirements in new buildings will be announced in February 2021.
  • Further details have been provided on the Fire Safety Bill which is being introduced in Parliament. The proposed legislation will amend the Regulatory Reform (Fire Safety) Order 2005 (‘the Fire Safety Order 2005’) to make building owners accountable for not complying with the necessary fire safety guidelines.  Residential building owners will have a legal obligation to consider and mitigate the risks of any external wall systems and front doors to individual flats.

Finding a specialist lawyer for landlord and tenant disputes 

Solicitors specialising in property law are working closely with landlords and leaseholders/tenants to resolve disputes around cladding removal.  Many leaseholders are living in flats that are unsalable (not to mention unsafe), and it has become clear that there is a significant shortfall between the cost of the cladding removal and associated repairs and the government funding available.

According to the BBC, a clause in the contract the Ministry of Housing, Communities and Local Government requires applicants to the fund, usually managing agents or building owners, to sign states that applicants themselves will be liable for any repair costs not covered by the fund.  This has led to many managing agents and building owners understandably refusing to sign until the government clarifies the extent of their liability. 

The Housing Minister’s announcement concerning measures to fix the ongoing cladding crisis will be welcome by property lawyers, building owners, and leaseholders/tenants alike.  However, with the threat of naming and shaming freeholders who have not started to undertake work or whose building repairs are progressing slowly, the pressure is mounting on the government to swiftly provide clarity and additional funding schemes.

Get in touch today with one of our property litigation solicitors for further advice.

What Proposed Leasehold Reforms Mean For Landlords and Leaseholders

Few legal matters have caused as much ire in the media and amongst affordable home campaigners as the leasehold system.  Once a form of land tenure spread across the British Empire, it is now almost solely confined to England and Wales.  Ever since the ground rent scandal caught the media’s attention in 2017, (where developers locked tenants into contracts which could see ground rent of £200-£400 doubling every ten years, making the properties virtually unsellable), there have been calls for the system to be radically reformed.  In 2019, it was announced that all new build homes must be sold as freehold and ground rents on new flats slashed to zero.  And in January 2021, further leasehold reforms were announced. 

What are the proposed new reforms?

The government’s proposed changes to the leasehold system are as follows:

  • Leaseholders will be able to extend their leases for 990 years as opposed to the current 90 years, and ground rent following the extension will be abolished.
  • Although the vast majority of landlords quote reasonable costs for leasehold extensions, a few do significantly inflate the figures. To prevent this, the government will provide an online calculator to determine how much a leaseholder will need to pay to extend their lease or buy the freehold of their property.
  • The requirement to pay the ‘marriage value’ after the lease runs down to 80 years or under will be abolished. The ‘marriage value’ refers to the amount the property has increased in value since the last lease renewal.  Having to pay ‘marriage value’ can add thousands of pounds to the cost of a lease renewal.
  • Ground rent will be scrapped for retirement properties in order to protect the elderly.
  • Leaseholders can voluntarily agree to a restriction on any future development of their property to avoid paying ‘development value’.

What is the purpose of the Commonhold Council which is being established?

Commonhold is a form of homeownership introduced in 2004 by the Commonhold and Leasehold Reform Act 2002 and Commonhold Regulations 2004.  It allows people purchasing units in multi-occupancy developments to own the freehold of their home.  In addition, a commonhold or residents’ association (made up of the unit owners) owns and manages the common parts of the property per standardised rules.

Under the proposed legislation, the government is to establish a partnership of leasehold groups, industry, and government.  The Council will be charged with helping prepare landlords, homeowners, and the property market for the widespread take-up of commonhold tenure.  It is believed that fewer than 20 commonholds have been created because of the complexity moving from a leasehold structure to commonhold and the reluctance of mortgage lenders to recognise the latter.

What should landlords and leaseholders do to prepare for the changes?

Both landlords and leaseholders will be affected by the proposed changes to the leasehold system.  Freeholders, especially developers, are likely to find that the projected income from their leasehold properties will fall if the law changes.  And although the changes appear advantageous for tenants at first glance, it is best to proceed with caution.  With the problems resulting from the Coronavirus pandemic and Brexit, there is no guarantee that a Bill will be passed into law this year or even next.  As a comparison, the government announced an overhaul of divorce laws in April 2019.  The Divorce, Dissolution and Separation Act 2020 received its Royal Assent in June 2020 but will not come into effect until Autumn 2021, two years after the announcement was made.

For both landlords and tenants, it is best to seek advice from an experienced residential property solicitor before taking any action based on the government’s announcement regarding changes to the leasehold system.

To make an appointment to discuss any aspect of residential property please get in touch today.

The Impact of Coronavirus and The New Restrictions on UK Property Sector

Following the latest set of restrictions in November in the UK, the housing market will remain open. However, the outlook for house prices is looking increasingly uncertain. In this post, we look at how the Coronavirus epidemic is impacting the market from the perspective of homebuyers and sellers, as well as those in the real estate business.

Why has the property market been doing so well since the first lockdown?

The swift actions taken by the government earlier this year, in the forms of mortgage payment holidays and the furlough scheme, meant; that despite the recession, the property market has been able to keep moving forwards. This is why when we would usually expect to see a dip in house prices during a recession (being driven by people who are forced to sell as they can no longer afford it due to job loss, for instance); we have instead experienced a market that is being driven by people who are motivated to move, and who can afford to do so. In previous recessions, where no government support was offered, this resulted in people being forced into a financially challenging situation where they needed to move home.

When the housing market was forced to close down earlier this year, property website Zoopla reported that an estimated 375k property sales worth approximately £82 billion were placed on hold. When the market re-opened after the first lockdown, the property market was flooded on a large scale.

Buyers were typically looking for country locations and more space, and due to new home working arrangements, they were able to look for properties more rurally and not necessarily be tied into needing a property near a place of work. At this point, it seemed quite clear that it was a sellers’ market.  Add to this, the news of the stamp duty holiday which saw the nil-band raised from £125k to £500k, and it’s easy to see why, by August, house sales hit a record milestone; with Rightmove reporting that a 10-year high had been achieved with the number of properties selling within 7-days of being listed. 

UK House Price Outlook

Although it’s now expected there will not be any immediate drops in UK house prices, the economic impact of the secondary lockdown could have implications that surface further down the line. In October, it was widely reported that annual house price growth had reached a five-year high of 5.8%. However, there seems to be a growing consensus that this growth will not continue and that we should expect to see only minor price falls in the market next year.

The forecasts for UK house prices have varied a lot throughout the Coronavirus epidemic.

Deutsche Bank predicted drops as high as 23pts, while Zoopla and Savills remained more optimistic after the surge and predicts the year will end more positive, up 4% overall.

Ultimately, both the buying power and mortgage availability are all determined by the state of the economy.  For those looking at borrowing money for a mortgage, forecasts suggest that the Bank of England will not look to raise the base rate any time soon.

After the furlough support scheme comes to an end, followed swiftly by the end of the stamp duty holiday in March, all eyes will be on the state of the economy and its recovery. As this period is also thought to be the time when unemployment levels in the UK will peak, the potential for price falls will depend on how serious the damage to the economy is, and indeed, how much time it takes for unemployment levels to fall. If unemployment levels become too high, this could have a direct impact on property prices, and more people could be forced to sell their properties. Any further restrictions on lending could also reduce the prospects for first-time buyers as well.

The Impact of a Second Lockdown on UK Property Businesses

As we’ve already mentioned, the UK property markets are open for business. While Wales did face a two-week circuit breaker close down during the final part of October and early November, they are now fully operational once more.

Overall, the property market is showing great levels of resilience during lockdown number two. Property valuations are up by 38% over the same period, and as expected, viewings have fallen by around 15%. Interestingly, property exchanges have risen by approximately 11%, reaching another all-time high.

Although some estate agency owners feel sellers and buyers are potentially delaying decisions until after lockdown two is complete, there are others who report they’ve seen an increase in their property business revenues compared to the same period last year.

Outside of the control of UK property is the looming potential for a no-deal Brexit and the race to find a vaccine or treatment for COVID-19. Both of these events will impact the property market in one way or another. However, for now, those in the business of trying to forecast what will happen in the market seem to confer that following a busy summer period and the release of pent-up demand following the easing of the first set of lockdown restrictions in the UK, there is enough momentum to keep the market moving forwards.

If you have any questions about your contractual obligations or would like help with any property issue, our commercial property solicitors at North London firm OGR Stock Denton can give you the guidance needed to know exactly where you stand.

Stamp Duty exemption for UK home buyers

The COVID-19 pandemic has turned many industries upside down by virtually shutting off their customer base, and the Government has resorted to a variety of extreme measures in order to limit the damage that the businesses in these industries suffer. Of all these measures, one of the biggest is the Stamp Duty holiday, which could exempt home buyers from tens of thousands of pounds in costs. So how does the holiday work, who does it affect, and how can we help? Let’s take a look.

What is the Stamp Duty holiday?

Chancellor Rishi Sunak implemented the Stamp Duty holiday to revive the flagging housing market, as the residential property market clamped up in response to the economic situation. The measures mean that Stamp Duty only has to be paid on properties worth more than £500,000, rather than the £300,000 limit under the old rules. This measure actually doesn’t mean much for first time home buyers, because the average new house only costs £208,000, but to professional landlords and investors, it can mean a huge boost to their profits.

What are the potential savings?

For property dealers who regularly transact in homes worth more than £500,000 the old SDLT regime would have seen them pay in excess of £30,000 in Stamp Duty alone, paying 3% on the first £125,000, 5% on the next £125,000 and 8% on the last £250,000. Now, as a result of these changes they will only pay the minimum rate of 3% on the sale, so a £500,000 property will only cost them £15,000 in tax. Clearly it’s well worth considering investing during this holiday, which ends in March 2021, due to the level of potential savings.

How can we help?

If you’re an existing landlord or investor hoping to capitalise on the holiday, or you’re a new starter looking to dip your toes in the water, it pays to get expert advice in these unprecedented times. While this is a potentially golden opportunity to make a life-changing investment, the difficult economy also makes it a serious risk, and to go about it without the best help could have serious consequences. Thanks to our years of conveyancing experience, and our down to earth and no-nonsense advice, we can help you make the best investment with your money and to ensure you make the most out of the SDLT holiday. If you’ve got your eye on a property, and you’d like to make your move during this time, get in touch with us on (0)20 8349 5501.