Housing market open for business during national lockdown

The housing market in England will remain open during the four-week lockdown. Housing Minister confirms that there are no plans for stamp duty extension. Chancellor Rishi Sunak is given landlord wish list ahead of spending review.;
Housing market

The housing market in England will remain open during the four-week lockdown.

Housing Secretary Robert Jenrick took to social media to reveal that the housing market will still be able to operate.

Ahead of the lockdown starting on Thursday 5 November, Jenrick outlined the new rules, explaining that:

  • Renters and homeowners will be able to move
  • Removal firms and estate agents can operate
  • Construction sites can and should continue working
  • Tradespeople will be able to enter homes

However, they all must follow Covid-19 safety guidance.

This is positive news for the sector, as the housing industry is already experiencing a boost as people continue to take advantage of the stamp duty holiday.

This means that transactions near completion will not be hindered by additional delays in the conveyancing process, which had been a concern for many.

Jenrick also confirmed that, with the extension of the furlough scheme, the government would also extend mortgage payment holidays, to continue to help homeowners that have been financially affected by the pandemic.

Evictions - what does this mean for landlords?

Whilst the eviction ban ended several weeks ago, it was agreed that tenants living in areas under the old Tier 2 and Tier 3 Covid-19 restrictions in England were protected from eviction.

The High Court Enforcement Officers Association agreed to the request after Justice Secretary Robert Buckland wrote to bailiff trade bodies, asking them not to proceed with evictions in tier 2 and tier 3 areas.

However, with the new lockdown, it is thought that the bailiffs’ decisions not to carry out evictions will be extended across England.

A grace period, where evictions will be on hold, has already been introduced in England and Wales, over Christmas.

The Ministry of Housing, Communities and Local Government has agreed to a request from the government not to evict tenants in England and Wales between 11 December 2020 and 11 January 2021, to ensure that tenants are not evicted during the festive period.

As there will be only a week from the end of the lockdown and before the Christmas grace period begins, it is thought that tenants will not be evicted until at least the 12th January.

It is expected that courts will continue to prioritise eviction cases involving anti-social behaviour and domestic abuse during lockdown.

The impact

The housing market remaining open through lockdown is clearly positive news for everyone in the industry, especially as agents, lenders and conveyancers are already experiencing unprecedented levels of demand from consumers that are eager to take advantage of the stamp duty holiday.

Closing the market at this time would have added pressure on the sector by creating yet another backlog of demand.

There are still some unanswered questions awaiting a government response.

Although Jenrick announced that estate agents would be able to operate, they are still waiting to hear from the government as to whether or branches will be able to remain open, or whether they will have to work remotely.

Although there is an end date for the lockdown, there have been various messages circulating from the government over the weekend. As the week progresses, it is hoped that a consensus view will emerge.

No plans for stamp duty extension

Housing Minister Christopher Pincher has confirmed that the UK Government has no plans to extend the Stamp Duty Land Tax holiday past its March 31st 2021 deadline.

The confirmation comes after calls for an extension in response to evidence that purchase completion times are being delayed by multiple factors. Covid-19 restrictions limiting office numbers, as well as furloughs and staff redundancies have caused delays of up to two months in some places.

Christopher Pincher, Minister of State for Housing said:

“The temporary increase in the Stamp Duty Land Tax nil rate band was designed to provide an immediate stimulus to the property market, where property transactions fell during the Covid-19 lockdown. The Government does not plan to extend this relief and will continue to monitor the property market.”

The Conveyancing Association had previously been lobbying to extend the deadline. Chancellor of the Exchequer Rishi Sunak has been asked to push the deadline back until September 2021.

How Coronavirus has impacted the housing market

There is evidence pointing to a clear boom in the housing market since the stamp duty holiday was introduced.

A survey conducted by Simply Business indicated that 10% of landlords were looking to expand their portfolio – up from just 3% at the end of 2019.

Alan Thomas, chief executive at Simply Business, explained:

“The coronavirus outbreak and consequent lockdowns have been transformational in UK renters’ attitudes towards property, and therefore where landlords are looking to make their next investment.

"There appears to be a shift in terms of what is considered a desirable property by tenants, and residential landlords – crucial to both the economy and the local communities where they provide housing – along with the market in general, are reacting to this.

"What is clear though, is that the UK buy-to-let market is going through somewhat of a transition, driven by a move away from the previous demand for city centre properties.”

There were also reports predicting that demand for properties in central locations would decline soon. This prediction very much came true in 2020, with demand from both renters and homeowners increasing in towns and rural areas.

Rightmove, the UK’s largest online real estate website, revealed that searches in areas with populations lower than 11,000 have doubled when compared to the same period last year.

Savings account interest rates hit an all-time low in March, which may be fuelling investment in property – now a more reliable source of returns.

What does this update mean for landlords?

It is going to be exceptionally difficult to ensure deals seeking to take advantage of the stamp duty holiday complete by 31st March.

If you are keen to try, then the best you can do is maintain a clear dialogue with your broker, get all requested information and documents to them as fast as possible and make sure your legal team are aware of your deadline and are keen to help you meet it.

If you select a solicitor who is unfamiliar with property investment cases, you will put yourself at a disadvantage.

Feedback from lenders in the buy to let industry, is that solicitors are already issuing disclaimers that they cannot be held liable for missing the March deadline.

Finding a legal representative who deals with investment in buy to let and commercial property every day of the week will at least ensure you have a team familiar with the territory.

A good broker will give you clear and regular updates, but a broker is reliant on you, your solicitor and the lender to help you get through to completion.

Chancellor given landlord wish list ahead of spending review

Chancellor Rishi Sunak has revealed that the next spending review will take place on 25 November, where he will announce the governments spending plans for the next 12 months.

Sunak already has a wish list from landlords and industry bodies, due to the lack of support that has been provided to them, during the Covid-19 pandemic.

In September the treasury cancelled earlier plans for the usual five-year spending review, instead the announcement will now be restricted to a yearly review.

The Treasury decided that now is not the time to outline long-term plans. They suggested that people would rather see them focus on the ‘here and now’.

Therefore, next month’s review will focus entirely on the country’s response to Covid-19 and how they plan to support jobs.

Sunak explained:

"In the current environment it's essential that we provide certainty. So we'll be doing that for departments and all of the nations of the UK by setting budgets for next year, with a total focus on tackling COVID and delivering our 'Plan for Jobs'”

"Long-term investment in our country's future is the right thing to do, especially in areas which are the cornerstone of our society like the NHS, schools and infrastructure.

“We'll make sure these areas crucial to our economic recovery have their budgets set for further years so they can plan and help us build back better”

On behalf of landlords

The first submission for his consideration ahead of the spending review, issued earlier this month, is from the National Residential Landlords Association (NRLA).

The NRLA’s submission is calling for a package of financial support for landlords and tenants to assist with rent arrears relating to Covid-19.

Specifically the NRLA are calling for:

  • Interest free, government guaranteed loans for tenants affected by coronavirus. These should be paid directly to landlords and should cover all arrears accumulated since the start of the pandemic ;
  • Income support for landlords to cover arrears, where affected tenants either refuse to apply for a loan, or where loans are not best suited to them;
  • Reforms to the welfare system, to give both landlords and tenants confidence that payments will cover their basic housing costs.

The NRLA are also encouraging the government not to increase capital gains tax, as they explain it would likely freeze the market, making it difficult for tenants.

In regards to the NRLA’S submission, Meera Chindooroy, deputy director for policy and campaigns for the NRLA said:

“Landlords are not property tycoons and the vast majority have just one or two properties which they often rely on for at least part of their income or pension.

“All of our research shows that in the vast majority of cases where tenants have struggled financially due to Covid-19 landlords have done everything they can to sustain the tenancies.

“However our latest figures show landlords have lost up to £437m already as a result of Covid-19 and have been unable to access any of the financial support available to other businesses.

“Landlords cannot shoulder these levels of rent arrears indefinitely, nor should they be expected to.

“It is time the Government stepped up to support to the hardworking landlords out there providing the homes to let that this country so desperately needs.”

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.