Covid-19: UK property market to be suspended as sales drop significantly

UK house buyer interest has slumped as people stay at home to try to limit the spread of the coronavirus, according to property listings websites.

Zoopla predicts housing transactions will drop by up to 60% over the next three months.

Meanwhile, an increasing number of sales that had been agreed before the lockdown are falling through.

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The government has advised homebuyers and renters to delay moving as much as they can.

“Would-be homebuyers paused major decisions and took stock of the unfolding events in the UK and around the world, even before [restrictions] announced by Prime Minister Boris Johnson,” Zoopla said.

Demand in the week to 22 March slumped 40% on a week earlier, its figures suggest.

The property listings site said the UK housing market had a strong start to the year before the coronavirus outbreak crushed demand.

The pandemic has since led to a “rapidly increasing” proportion of sales falling through, as would-be buyers “reassess whether to make a big financial decision in these shifting times”.

Sales were still being agreed, it found, but at a 4% slower rate than at the same time a year earlier.

The Financial Times has reported that bankers have been urging government ministers to suspend the housing market.

They are concerned about the impact of the pandemic on valuations but they are also worried about issuing loans due to uncertainty about the effect the virus will have on the economy, the paper reported.

In response to the crisis, UK Finance, which was formerly known as the British Bankers Association, said lenders would extend mortgage offers for people who were due to move house during the lockdown.

“Current social distancing measures mean many house moves will need to be delayed,” Stephen Jones, who runs the group, said in a statement.

“Where people have already exchanged contracts for house purchases and set dates for completion this is likely to be particularly stressful,” he said.

“To support these customers at this time, all mortgage lenders are working to find ways to enable customers who have exchanged contracts to extend their mortgage offer for up to three months to enable them to move at a later date.”

The government has told people “there is no need to pull out of transactions”, instead encouraging them to “amicably agree alternative dates to move”.

The sentiments identified by Zoopla echo a previous announcement from rival Rightmove, which said the slowdown in the UK housing market had been “significant”.

“The number of property transactions failing to complete in recent days and likely changes in tenant behaviour following the announcement of the renters’ protections by the government may put further pressure on estate and lettings agents,” it said, referring to the recent ban on evictions.

The government said on Wednesday that home buyers and renters should delay moving if possible while emergency measures are in place to fight coronavirus.

“If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on social distancing to minimise the spread of the virus,” a housing ministry spokesperson said.

“Anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice and not move house for the time being.”

Meanwhile, there were reports on Thursday that mortgage lenders had started to temporarily restrict some products for certain customers.

Source: BBC News

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UK Covid19 Lockdown: Only emergency repairs allowed, Landlords and Estate Agents told

The latest advice issued today is that although tradespeople can complete repairs at properties if they take precautions, landlords should avoid face-to-face contact with existing or prospective tenants.

The government has told landlords and letting agents that they should not conduct house viewings or complete routine inspections of properties, but has said that their tradespeople can complete emergency repairs.

See the source imageBut confirmation has yet to come through from the Ministry of Housing, Communities and Local Government about essential tasks such as gas safety and electrical equipment testing and whether these will be exempt from the lockdown as ‘essential services’.

It is also understood that ministers are considering whether to allow many of the companies serving the private rented sector to continue doing their work if a property is owned by someone working in frontline health and emergency services.

Until yesterday industry organisation Gas Safe Register was recommending to landlords that they book inspections by an approved engineer as soon as possible if their renewal date was within the next two months.

The organisation says that following the lock-down announcement last night, it is urgently seeking guidance from the Cabinet Office and the Health and Safety Executive about whether residential property safety inspections will be deemed ‘essential services’.

Also, landlords who are refurbishing properties can continue their work as construction sites have also been given the green light as essential service, it was confirmed this morning.

But all this advice from government remains just that – guidance; the necessary legislation to make it an offence to ignore the rules has yet to make its way through parliament, although this is expected to be achieved at any moment.

One grey area is whether landlords can help tenants move into or out of a property; there are a large number of outstanding rental tenancy contracts that were signed and paid for up-front before the Coronavirus shutdown, and now lockdown, gripped the nation.

Source: LandlordZone

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Property Ombudsman conference postponed due to COVID 19

The Property Ombudsman has announced that it will postpone its annual conference, which was to have been on June 18, until next year.

In its place, TPO will be holding a Rightmove Webinar on the same morning.

Katrine Sporle, who retires as TPO later this year, says: “Given the circumstances affecting us all, we have decided to convert the conference in Solihull to a Rightmove Webinar to take place on the morning of June 18. We will provide updates, advice and interactive sessions to respond to agents’ questions and concerns.”

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TPO’s office says tickets already purchased will be credited towards the 2021 conference “when normal business resumes.”

Meanwhile a statement from the organisation says it’s business as normal at The Property Ombudsman, with many of its staff managing to work remotely to provide a normal service.

However, TPO says that the priority for agents is of course to ensure the welfare of their employees and advises: “Therefore, if services have to change and complaints cannot be dealt with in the usual way, agents should ensure this is communicated to complainants in writing.”

Should a complaint then be subsequently escalated to TPO, this will be taken into account.

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UK Budget 2020: Low interest rate & spending on housing may boost property market

The Government unveiled its first Budget since the General Election, amid increasing coronavirus pressures.

The Budget came hours after the Bank of England’s announcement of an emergency cut in the base interest rate to shore up the economy following the outbreak.

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The cut, from 0.75 per cent to 0.25 per cent, takes borrowing costs back down to the lowest level in history, and may help the housing market.

Just 27 days after taking over the Treasury, the new Chancellor, Rishi Sunak, announced a dramatic increase in infrastructure spending, including new housing.

Stamp Duty

A Stamp Duty surcharge of 2% will be introduced for overseas non-residents who buy residential property in England and Northern Ireland. This will start from April 1 2021.

The Government said the measure “will help to control house price inflation and to support UK residents to get on to and move up the housing ladder”.

There were no other changes to Stamp Duty charges; a disappointment to many potential buyers.

Interest Rate

The reduction in the bank rate will benefit homeowners on variable rate mortgages; however, these represent a minority with over 90% of new mortgages now fixed rate.

For those on variable rates, it normally takes up to two months for the change in bank rate to filter down, but the Government will put pressure on financial institutions to implement it faster.

It’s important to remember that it is up to the banks’ discretion as to how much of the cut they pass on to consumers, which could stymie potential benefits.

Spending on housing

The Affordable Homes Programme, intended to ‘help more people into homeownership and help those most at risk of homelessness’, will be extended with a new multi-year settlement of £12 billion.

This marks a £3bn increase on the current five-year Affordable Homes Programme, which is worth £9 billion and is due to end in 2021.

The Chancellor also announced £1.1 billion worth of allocations from the Housing Infrastructure Fund to develop almost 70,000 homes in nine different areas, including Manchester, South Sunderland and South Lancaster. This was announced in addition to a new £400m for new housing on brownfield sites.

Source: Zoopla Property News

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Business rate hits struggling UK High Streets hardest leading to more closures

Finding a new retailer for a prime spot in Blackpool town centre used to be easy.

In the 1980s and 1990s, firms would have been fighting over the keys to 18-22 Victoria Street, a large, modern two-storey unit directly opposite the shopping centre. Not any more.

Until last month, the property had been rented to Topshop and Topman. But their owner, Sir Philip Green’s Arcadia group, walked away when the lease came up for renewal. His shops have been struggling to keep up with the competition, and dozens, up and down the country, are being closed.

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“We are having difficulty attracting any interest, never mind a national retailer,” says Paul Moran, a ratings surveyor whose company, Mason Owen, is tasked with finding a new tenant.

Business rates, he says, were a factor in Arcadia’s decision to pull out, and they’re now a big barrier to someone else moving in.

“The first thing tenants look at are their outgoings. And when they see the rates bill, they will be put off by that. Normally you’d expect to be paying 50% of your rent in rates, but the rates bill in this shop is dramatically higher than that.”

With retail in turmoil, pressure is growing for change. So what are business rates and why are they a problem?

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Business rates are a kind of council tax for commercial property. All sorts of premises have to pay them, from offices, warehouses and pubs, to power plants, train stations and shops.

Bills are worked out based on the government’s estimate of how much the property would cost to rent on the open market. Businesses have to pay the tax regardless of whether the space makes any profit or not.

As a rule of thumb, your business rates bill is now typically half of your rent. That’s a big financial burden in itself for retailers with lots of shops. But many of our national chains aren’t even being charged the right amount to begin with. They’re paying millions of pounds more in rates than their rents would imply.

Properties get revalued every few years by the government to make sure the occupiers are paying the correct sums. Some bills go up and some go down. The last revaluation was in 2017.

For towns like Blackpool, this should have been good news because retail rents had collapsed. Their business rates bills should have dived as a result, bringing some relief to a town grappling with too many empty shops and years of government austerity.

But here’s the problem. Changes in bills, both up and down, are phased in gradually over several years to help businesses adjust. It’s like a shock absorber, and it’s called “transitional relief”.

The system is good news if your bills are going up, but not so good if you’re in a property due a big reduction. It’s a bit like being told you’re due a tax cut, but your bill will only be cut incrementally over five years, and you may never get the full reduction.

It works like this because the government wants to make sure it receives the same amount in business rates in real terms, or adjusting for inflation, each year. So rate rises and decreases must balance. This is an England-only policy.

And it’s the largest stores occupied by big chains that are the most affected. Blackpool’s 18-22 Victoria Street is a good example.

Source: BBC News

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Coronavirus set to slow UK property boom

Property Industry figures are worried public concerns about coronavirus will have an adverse effect on business, after the number of reported cases reached 115 yesterday.

The market has had a busy start to the year, but there are fears the virus will put the breaks on activity.

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Jonathan Sealey, Hope Capital’s chief executive, said: “Over the past few months it has felt as though we were experiencing a real sea change in the market as the political arena became less of a focus.

“We have definitely seen the busiest start to any year so far as people started looking forward to a more stable environment.

“Unfortunately, that may well be up in the air again as nervousness surrounding the COVID-19 outbreak takes hold.”

And Richard Pike, Phoebus Software sales and marketing director, said: “We’ve started the year well but there is one black cloud that is hard to ignore, and it is one that is already having an effect on the world’s economy.

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“How the coronavirus effect will translate down the line into the housing market is anyone’s guess, but it is unlikely to have no effect at all.”

One commentator speculated whether the virus fears could push the regulator towards loosening mortgage affordability rules.

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “While we’re yet to see the impact of uncertainty linked to coronavirus on the housing market, if lending continues to slow – the time might be coming for the regulator to consider a gentle easing of restrictions around affordability.”

Source: PropertyWire

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