We have made it through our first full month of 2021 and the year is now well and truly underway. With the stamp duty holiday nearly a month away from ending we expect to see the rush to purchase slow down as people realise that they are highly likely to miss it.
- Prime property remains robust throughout pandemic – New client-data data from Coutts (wealth manager and private bank) shows that the UK’s prime property market is evolving rather than suffering through the pandemic and there has been a rise in buying activity in main homes, second homes and investment properties. Outside of London, which remains the UK’s largest prime market, the south east was the most popular for new mortgages for main homes, particularly Kingston upon Thames, Guildford and Oxford. The data also suggests that demand for staycations is increasing with more people most likely to be looking for a ‘home away from home’ to provide a change of scenery during the lockdown. Holiday homes saw the biggest increase in purchases during 2020 with an increase of 43% with the south east, south west, West Cornwall and Gloucester being the most popular places. Again, we can see another example of buyer trends changing due to the pandemic. Long-term, the bank believes the momentum seen towards the end of 2020 will continue throughout the year ahead, largely down to social changes and a favourable macroeconomic environment. Alan Higgins, chief investment officer at Coutts said: “Firstly, the uncertainty with respect to Brexit is largely in the past. Secondly, we expect a V-shaped economic recovery as the vaccine distribution progresses. And thirdly, we should see the release of pent-up demand from buyers and sellers who put plans aside during lockdown.”
- Build to Rent building momentum – You may have seen us talk about the emergence of the Build to Rent sector in the past and it isn’t slowing down. BTR remains the fastest growing sector with thousands of developments currently under construction across the country, and this trend looks set to continue in 2021 and beyond. BTR completions are estimated to double by 2025, according to a forecast from BTR specialist agency, Ascend Properties. Landlords and Investors may be thinking, ‘I can’t buy these properties so what has it got to do with me?’. Well, this surge in BTR shows that there is a clear demand for rental properties otherwise these big institutions and developers would not be pumping a lot of money into building these schemes. It also shows how the trend from owning a home is switching to a more European trend of renting. We have also seen a shift to developments including desirable amenities for tenants such as gyms and concierge services. So this should give confidence to investors that there is going to be demand for high-quality rental properties for many years to come.
- Generous landlords praised for discounting rent to tenants – It’s not often that landlords receive praise in the press so it has been nice to hear a heartwarming story like this. Many people are struggling at the moment and it is nice gestures like this that go a long way and mean so much to people. Sulets in Leicester announced on January 21 that it would give “a substantial rent discount” to all student tenants, equivalent to roughly four weeks rent and they proposed that the discount would be funded from its own surplus but numerous landlords have now contributed to the scheme out of their own generosity. A statement from Sulets says: “This is welcome news for all stakeholders and promotes landlords in a more positive light, particularly with endless negative press regarding landlords over the years. Sulets would like to thank all landlords who have been in touch and donated to the discount scheme. It goes hand in hand with the Sulets mission and values to raise student housing standards while being fair and transparent”. Also, Unite Students, the UK’s largest manager and developer of purpose-built accommodation for the student sector, is extending its 50 per cent rent discount scheme across the country until March 8.
- New build delivery tumbles – 30,000 fewer homes built last year – Property developer StripeHomes has revealed the level of new homes reaching the market has fallen by more than 32,000 across England year-on-year. This decline in delivery has been seen across the whole of the UK, with all regions seeing a lower level of new homes completed compared to the previous 12 months. The South East has seen the largest year-on-year reduction in new housing stock with 7,170 fewer than the year before. The pandemic can’t be solely blamed for this shortage as we have been missing the quota needed for numerous years. James Forrester, managing director of StripeHomes, says “there are many that believe the big housebuilders have used the pandemic as a smokescreen, to detract from their usual practices of land banking in order to increase profits. Having drip-fed stock to the market for many years now, there’s no reason to believe this practice would have changed in the last year and the issues that have faced the sector provide them with the perfect excuse to continue”. Estimates have put the number of new homes needed in England at up to 345,000 per year and to put into context how much we keep missing these targets, In 2019/20, the total housing stock in England increased by only circa 244,000 homes. It is a near-impossible task to fix this crisis and one of the main reasons that the property prices are likely to continue rising.
That is all we have for you this week. If you have any comments or questions on this week’s news summary then please feel free to send us an email at [email protected] – if not, see you next week.